New home sales get most of the attention these days.

A big jump in new home sales in October helped push stocks up earlier this week.

Yet almost this was primarily a regional increase, not a national trend, with almost all the increased sales activity taking place in the South.

That makes sense give the sprawling geography of the region and the still relative plenty in terms of buildable land.

But it’s a different story here in New England and especially in highly developed Eastern Massachusetts, where buildable lots are hard to come by and town officials are not necessarily welcoming new homes with open arms.

A more meaningful indicator in some ways for the metro Boston housing market may not be new homes, but rather renovation activity.

We don’t have a lot of land to build new homes on, but we sure do have a lot of older homes that need new work.

Hence the latest report out of Harvard University’s Joint Center for Housing Studies, which tracks renovation activity, among other things.

If you are psyched to spend half a fortune on a fortune worth of stuff on Black Friday, you should read this entry later.

Today, I present a report from the Center for Retirement Research at Boston College. They do the National Retirement Risk Index. It measures the share of American households who are ‘at risk’ of being unable to maintain their pre-retirement standard of living in retirement. The report is very readable, if you want to see for yourself.

The news is not really news.

Since 2004, the percentage of households who are projected to not be able to retire at 65 with a stable standard of living has increased. Here's the breakdown by age group: Early baby boomers went from 35 percent to 41 percent. Late baby boomers went from 44 percent to 48 percent. Gen Xers went from 49 percent to 56 percent.

The reasons for the instability are not news either.

Almost three quarters (73 percent) of the increase in the percent ‘at risk’ was the result of the decline in house prices, reflecting the fact that housing is most households’ largest asset.

Sales may be up, but prices continue to lag.

The just released S&P/Case-Shiller national home price index reported a 8.9 percent decline in prices in the third quarter.

That is being billed as an improvement, given we saw pretty steep declines of 14.7 percent and 19 percent, respectively, in the previous two quarters, but it’s still a decline.

Meanwhile, home prices in Massachusetts dropped 2.6 percent in October, to a median sales price of $287,000, while condo values fell 4 percent to $240,000, the Massachusetts Association of Realtors reports.

Even the Boston metro market, a Case-Shiller star over the past several months, showed signs of weakness in the latest batch of numbers.

After a number of month-over-month gains, the Boston metro market actually saw prices drop from .3 percent from August to September. (That said, Boston prices are off just 3.3 percent from September 2008, still making it one of the best performing of the 20 major metro markets tracked by Case-Shiller.)

The continued weakness in pricing comes even as sales have posted some impressive – though arguably tax credit fueled – increases.

Home sales were up for the fourth straight month in Masssachusetts, jumping 17.7 percent in October, while condo sales were not far behind, rising 17.2 percent, according to MAR.

Nationally, resales of existing homes soared 10.1 percent, the highest in two years, the National Association of Realtors reports.

So what to make of this disconnect between rising sales and still falling prices?

It’s hard to argue that home sales are not on a roll again, both locally and nationally.

OK, housing bears, feel free to let me have it.

Still, housing sales were up for the fifth straight month in Massachusetts, jumping 17.7 percent in October. Condo sales were not far behind, rising 17.2 percent.

Nationally, resales of existing homes soared 10.1 percent, the highest in two years, the National Association of Realtors reports.

But the number that I have been wrestling actually came out a few weeks ago. And it may speak volumes to what is driving this current sales rally.

The Mortgage Bankers Association reported a dramatic falloff in applications for new mortgages the week of Nov. 13.

That appeared to reflect a widely reported, though temporary lag, in sales activity leading up to the extension of the tax credit by Congress earlier in the month.

OK, if you want to sell your house in today’s market, better get with reality.

Buyers are looking for a bargain. You have to at least create the illusion that you are offering them a deal.

Sounds like real estate 101 - I mean who hasn’t figured that out by now?

Well it’s clearly news to a pair of former Sox stars, who started out pitching way too high and now are having to go steadily lower.

But, frankly, even price cutting may be a little late here. Both former Sox greats are caught on the worst end of a market, with all the action right now in the lower and middle tiers of the market, not the high end.

Let’s take Manny Ramirez’s almost comical attempts to sell his overpriced downtown condo.

Welcome to the Boston area, where you will find a wonderful selection of overpriced homes in need of work.

That might be a good way of summing our market to a newbie perplexed at the idea that you can shell out a small fortune and walk away with a fixer-upper that could have cost a fraction of the price in most other markets.

I love living in the Boston area. But when it comes to homes in the broad middle of the market, the selection stinks.

Now that is not based on any scientific survey, though there are hard numbers to back up the idea that inventory levels, as a whole, are dropping and have been a problem for years now.

But when it comes to the quality of what’s being offered up for sale, here I am relyaing on observation and a steady stream of comments from frustrated buyers over the past year I have been writing this blog.

Buyers hunting for homes in the $300,000 to say $800,000 range within Interstate 495 have their work cut out for them.

Ah, to be a renter again.

Sometimes I get nostalgic for the good old days, a decade back when I was a renter.

Especially when I look at the mortgage payment or think about the money my wife Karen and I have poured into our fixer upper in Natick.

Time does wonders in erasing negatives, such as the fact my flat in Quincy was a little too close to the red line - or that the radiator heat would occasionally go bonkers, turning my little piece of Quincy into a steam bath.

Anyway, if you are renting now, or you are just a nostalgic old homeowner like me, here’s another survey about all those supposedly desperate landlords eager for warm bodies to fill empty apartments.

A survey by Rent.com of nearly 4,000 apartment communities across the country came up with some interesting tidbits.

Well, it’s amazing it’s taken this long.

There have been countless federal and state proposals to shower tens of billions on so-called victims of subprime lending.

But if you simply took out a boring old mortgage years ago and then lost your job in the Great Recession, well that’s just your tough luck that you were so responsible.

Uncle Sam has more urgent problems than helping you. Don’t come back until you really blow it.

Well, until now. Rep. Barney Frank has come up with an idea that, to his credit, is rather radical for an inside-the-beltway lifer.

OK, here’s one that is sure to get all the housing bears out there feeling downright surly again.

The National Association of Realtors is forecasting that prices will rise 4 percent in 2010 after hitting bottom in 2009.
Home sales will also rise by 700,000 to 5.7 million, he argued.

Lawrence Yun, the association’s chief economist, made the sure- to- be-controversial predictions to the faithful assembled at NAR’s annual convention in San Diego last week.

He also noted foreclosures will top out in the first half of next year and the “fear factor’’ of falling prices that has put such a damper on the market will fade.

I guess you have to hand it to Yun, if nothing else, he’s not afraid to stick his head out there.

Still, given some of notoriety the real estate trade group earned for some of its predictions during the bubble years, this is risky territory.

Massachusetts is just one of several states weighing plans to legalize casino gambling.

There are all sorts of hand-wringing about evil slot machines luring grannies to their doom.

But the real gambling, involving bets of tens if not hundreds of thousands of dollars, is taking place in the housing market.

A new survey by Move.com finds interest in buying foreclosed homes and condos as investment properties has doubled since March.

And it is just the latest sign of a disturbing, longer-term trend in which a home is seen not primarily as a place to live, but as an investment vehicle.

The home buyer tax credit is a funny thing.

I compare it to the big stimulus package. Something needed to be done to help brake the economic slide.

But don’t look too closely at the details because they are downright, postively ugly.

I have been in the do something camp, even if it isn’t perfect, to get the battered real estate market up and running again.

But the home buyer tax credit, as it now stands, is akin to hiring a thousand cargo planes to dump cash indiscriminately across the country.

Congress could have saved a few billion by making one very obvious tweak.

Instead of passing a bill that attempts to cover the entire country, our wise and wonderful leaders down in Washington should instead have targeted the credit at the hardest hit markets out there.

It’s clear by now which markets are really hurting and which are experiencing what amounts to a temporary setback.

Well, they certainly got my attention.

Whether I agree is another matter.

Norwell-based HouseSavvy, an on-line real estate service, is unilaterally declaring it a “sellers’ market’’ in the Greater Boston area.

My post yesterday on rising prices notwithstanding, are we not jumping the gun a little here?

Anyway, HouseSavvy’s Walter Hall points to stabilizing prices, rising sales activity and a continued drop in inventory as the reason for a rather controversial call.

Let’s take a look at his numbers.

Home prices are on the rise again in the greater Boston market, a new survey shows.

Values rose 1.6 percent in the third quarter over the same period in 2008 in Boston and the suburbs, to a new median of $331,500, Zillow.com reports.

Short-term, prices were up even more, rising 3.7 percent in the third quarter over the second.
It’s the latest bump up in prices in the Boston area over the past few months, one that is making our area a national leader of sorts as it climbs out the real estate ditch.

Boston and Milwaukee were the largest markets to see home prices rise year-over-year in the quarter, according to Zillow.

Still, as scary as the protracted real estate downturn has been, signs that prices are turning around relatively quickly here in the Boston area leaves me uneasy.

Months of dire warnings from the National Association of Realtors and other real estate lobby groups appear to be paying off.

Uncle Sam will keep propping up the still shaky real estate market for months to come under a slew of proposals advancing in Congress.

The most obvious are plans, now gaining momentum, to extend the first-time home buyer tax credit.

While the credit has had its share of critics, a proposal winding its way through the Senate would not only extend it into the spring, but would also expand it as well.

But amid the debate over the credit, Congress has also sped along two other darlings of the real estate industry.

One would prevent higher limits on jumbo loans from expiring, while the other would gut tough new appraisal standards real estate brokers contend have been killing sales.

The first-time home buyer tax credit has had its share of problems, including ongoing battles with fraudsters, which I will get to again a little later.

Still, for all the warts and gimmickry, it has definitely helped revive what was a stone cold dead market.

But restricting it to first-timers has been a problem, especially in a high-cost housing market like Greater Boston.

The credit has certainly stimulated demand, but there just aren’t that many starter homes around here. Frankly, there’s just not that much for sale, relatively speaking, with the inventory of homes on the market across the state having plunged from more than 43,000 three years ago to 28,000 today.

That’s led to bidding wars for a limited number of properties. On top of that, there’s no incentive
for homeowners looking to trade upl, which might free up more homes for sale.

A tentative deal reached last night in the Senate would both extend the $8,000 tax credit through April.

A rebound in home sales and prices clearly is picking up steam, helped in no small part by the home-buyer tax credit.

Still, what I find most intriguing about the latest batch of Bay State real estate numbers are signs the battered condo market may be finally starting to turn a corner as well.

Condo prices rose 1.7 percent in September, for the first year-over-year again since the financial crisis sent the world’s economy spiraling into a deep downturn last fall, according to the Massachusetts Association of Realtors.

In fact, it was really the first marked break from the seemingly endless spate of year over year price declines since October, 2007. (While condo prices rose last September, it was by a negligible .5 percent.)

The new median condo price, at $259,450 is also up 27 percent from the dark days of January, when it hit a low of $204,000.

Overall, sales were also up 12.2 percent, MAR reports.

The Warren Group offers a somewhat different take, reporting that condo sales were up 3.7 percent, the first year over year increase in two years. But prices were down 2.3 percent. (The Warren Group’s database also accounts for foreclosures, instead of just straight sales, accounting for the drop in price.)

So what’s driving the uptick? Two factors seem to be at work.

Well that’s what Kevin Ahearn, the sales wizard of the downtown Boston luxury condo market, claims.

Ahearn’s condo marketing/research shop just sent over a batch of stats on $1 million-plus condo sales in the Hub, culled from LinkBoston.com.

The numbers point to an increase in sales velocity in high-end condo sales since June, according to Will Kaufman, a market analyst on Ahearn’s team.

Let’s take a look at his argument.

Skimming the headlines on the latest local foreclosure news, you might have been tempted breathe easier.

“Mass Foreclosures Lower Than A Year Ago,’’ the headline from WBUR’s story, was fairly typical.

Well don’t.

The coverage of the Warren Group’s latest foreclosure numbers played up the idea the number of homes and condos seized and auctioned dropped in September. (Not that it’s a big secret, but I write a weekly column as a freelancer for Banker & Tradesman, which is published by the Warren Group.)

That’s technically correct, though it has more to do with a series of recent court rulings and banks proceeding more cautiously than before.

That’s hardly comforting – nor is it the real news here.

The real news, though, is foreclosure activity, as measured by initial foreclosure notices staring the process, is exploding.

And it might even set a new record before the year is done.

For those that follow the fortunes of the local real estate market, the recent Boston Globe/Suffolk University poll on the Massachusetts economy should be revealing.

While a number of economic indicators are starting to point up again, unemployment is not one of them.

And that has Bay State consumers fearful of losing their jobs and watching their spending carefully.

Nearly half, 44 percent, are concerned about keeping their jobs, and 15 percent are “very concerned.’’ That’s actually up from last spring, the article notes.

And at least the short-term outlook is pretty gloomy for most folks, the poll finds.

Just 21 percent think the economy will be better by the end of the year, and 41 percent it will actually be worse.

That’s a huge drop from the spring, when 42 percent were looking more optimistically to the prospect of a better economy by the end of the year.

All of which is not good news, at least short-term, for our local real estate market.

The Bryant auction over the weekend is the latest sign that all is definitely not well with the once seemingly invincible luxury condo market.

The posh new South End project managed to sell off a third of its 30 units in one day, but at a big cost.

Buyers snapped up 10 units at prices in the $1.3 million-to-$1.5 million range, managing to get anywhere from 21 percent to 41 percent off.

The question now becomes how much longer developers of some of the major new deluxe condo towers in downtown Boston can hold out before they go the auction route?

The new W Hotel and condo tower in the Theater District is preparing to open later this month, boosted by a $10.5 million city loan that will help it build out a crucial restaurant and retail space.

But the project’s marketing team has refused to release sales figures, a sure sign that efforts to move the W’s 123 condos are likely nothing to boast about.

The Clarendon, the new Back Bay condo and rental tower by the Hancock nearing completion, and the already opened 45 Province St., have also kept profiles as they have struggled to move units.

The Bay State may not be a national leader when it comes to the foreclosure epidemic.
That honor still rests with such boomtown states gone bust as Nevada, Arizona and California.

That’s the good news.

But let’s not get smug here.

The latest numbers from RealtyTrac are out, and they don’t look good for Massachusetts.

Foreclosure activity, including initial notices starting the process, auctions and bank repossessions, jumped more than 17 percent over the past three months compared to the spring. And the third quarter numbers, when compared to the same period in 2008, look downright hideous – a 34 percent leap.

Marc Zandi, chief economist of MoodysEconomy.com, is the latest to push for an extension of the $8,000 tax credit.

At the least, I found his reasoning – and his proposal – a cut above the typical, panic button, extend-or-the-market-will-die approach.

Zandi wants to see the credit extended to next June to all buyers except the very wealthy.

Zandi’s concerned that rising unemployment and foreclosures still represent major drags on the market. Extending the credit could help take the edge off both trends, while by next summer there’s a chance the job market will have stabilized.

His arguments, as well as those against extension, are laid out nicely in this CNNMoney article.

Still, Zandi’s proposal also includes an interesting – and potentially controversial - twist.

Check out Robert Shiller’s excellent analysis piece in The New York Times.

Shiller and long-time housing market co-guru Karl Case of Wellesley College have opened a window into the kind of thinking that has driven the recent surge in home prices.

And let’s just say it isn’t pretty.

The pair, best known for the S.&P./Case-Shiller home price indexes, over the summer surveyed newly-minted home buyers in four different markets on their views of the market, including Boston.

The surveys coincided with the recent, 3.6 percent increase in home prices from April to July, a dramatic shift coming after the nearly 5 percent drop in prices reported by Case-Shiller during the first few months of 2009.

Shiller and Case’s survey highlight two findings that should give pause to the housing bulls out there.

Architects provide an early warning system of sorts for the economy.

By the nature of their work, architects are some of the first to start work on everything from new homes and condo projects to office buildings.

So when that design work starts to dry up, you know bad times are on the way.

Conversely, when architects start getting work again, it can be a sign that a recovery might be finally taking shape.

While things are still pretty grim out there, the AIA Home Design Trends Survey is finally seeing signs of improvement after years of decline in the residential market.

Well that $8,000 tax credit certainly appears to be working well. Maybe a little too well, actually.

Check out Jenifer McKim’s story on the bidding wars that have erupted as first time buyers scramble to cash in before the credit expires this fall. (Rona also has put up an excellent post on the tax credit on as well.)

Frankly, reports of growing feeding frenzy among buyers desperate to land modest properties don’t thrill me.

It surely signals a return in force of the housing affordability issues that have increasingly dogged the Boston area over the past few decades.

A case in point is the two-family home in Dorchester that attracted 200 potential buyers, and 30 offers, a number over the $194,000 purchase price, the article notes.

There is also an example of a couple struggling to find a home in the Boston area for $300,000, having been outbid at least once.

All sound reminiscent of early years of the decade, when the late, great real estate bubble was just starting to inflate.

Pending sales are up again – but hold that champagne.

Here’s the good news. The National Association of Realtors reports its pending-home-sales index jumped 6.4 percent in August. That’s the biggest leap in more than two years.

In fact, it's the first time since the index was created in 2001 that it has been up seven months in a year, the trade group notes.

All that sounds great – that is until you look at the spread between the surge in pending deals the numbers of home sales that actually make it over the finish line and close.

That spread - and it’s a fairly extensive one - points to still unresolved problems, mainly with the banking industry, that is putting somewhat of a damper on the housing market recovery.

That’s my take on the spate of mostly encouraging local and national real estate numbers that just came out.

The S&P/Case Shiller home-price index, which tracks 20 major metro markets, posted its biggest gain since 2005, rising 1.2 percent in July.

Boston prices rose another 1.2 percent. (Seasonally adjusted, it is a smaller, .6 percent gain.) Overall, Boston home prices are off just 4.9 percent from last year, compared to more than 34 percent in Las Vegas, Case-Shiller reports.

The local numbers also looked solid. The Warren Group reported that single family home sales were up 2 percent, year-over-year, in August, while the Massachusetts Association of Realtors cited a smaller, .4 percent gain.

Median sale prices for the state appear to be firmly back over $300,000 again.

Still, don’t expect that will stop the doom-and-gloomers. After all, it was just a week or two ago bank analyst Meredith Whitney was touting her prediction of another, 25 percent drop in home prices.

That kind of collapse looks increasingly implausible, though there are still lots of things to fret about, if you are so inclined.

Sam Schneiderman, Broker-owner of Greater Boston Home Team continues his Monday series.

Last Monday, we began a discussion about market forces to consider when buying.

I asked two questions:
1. Based on a good look at the indicators, do you think that timing the market is really possible?
2. Should buyers and sellers try to time the market or just move when they are ready?

Overall, those that answered the questions were balanced between those that thought the market could be timed and those that thought it could not. If our small survey is correct, then Lai was correct when she said:

“I find people who said the market will bottom in next 12 months and people who said the market will crash 20% in next 12 months equally overconfident about their opinion. We just don't have that crystal ball.”

There were also those that were buying or in the market because they were ready or needed to at this stage of their lives and they could get a mortgage they could afford. I agree with John, who said,

“There is really only one factor that drives home prices and that is the ability of a person or household to service the mortgage debt (and all other related household expenses). The ability to service the debt in turn, is tied to wages, interest rates and credit availability.”

What surprised me is that there was not much talk about prices vs. interest rates.

All the real estate folks pushing for an extension of that $8,000 first-time buyer tax credit should be doing cartwheels right now.

The credits, set to sunset in November, were increasingly looking like an endangered species.

A series of encouraging housing market reports were starting to raise questions about the need for this ongoing, multibillion-dollar federal subsidy.

Then along came Thursday’s stinker of a home sales report.

In case you missed it, home sales dropped 2.7 percent in August, breaking a recent run of increases that has fueled hope that the worst of the housing downturn is over.

More painfully, prices dropped yet again by a very painful 12.5 percent.

That’s pushed the median price of a home below $200,000, down to $177,700.

One of the real estate attorneys that frequently works with my clients said something like this to me, “I wish Obama would extend the first-time home buyer tax credit already; my daughter doesn’t know whether she has to buy now in order not to miss it.” Her daughter is buying on the Cape, where prices are lower than around here. In her opinion, that $8000 makes a significant difference.

Although I get flack on this site because I wear the uniform of a Realtor – a member of the National Associations of Realtors (NAR) – most of you know that I am consumer-oriented and buyer-friendly. Today, I am going to let my cynic flag fly:

I told my attorney-colleague something like this: “The extension of that credit will not be announced until the first week of November, or later. If it is announced before that, I owe you lunch.” (The current deadline requires that the property closes by November 30th. In order to collect, buyers need to be under agreement early in November in order to close on time.)

Scott's entry yesterday about starter homes inspired me to repeat an entry I posted last winter. I think true starter homes are a big mistake for buyers. Only in times when prices are inflating rapidly can a buyer get ahead by choosing a starter home. This is not one of those times.

You probably know someone who married too young or too impulsively because it was “what you are supposed to do.” In some cases this works out great, as the couple grows along parallel courses, Many times it is an emotional, financial, and legal mess. The same is true of a starter home.

John Perkins, in The Globe article I mentioned yesterday, (August, 2008) did a great job of outlining the costs of a real estate transaction to show the young couple that buying for the short term was not a good idea.

Short-term ownership does not pay. Well, actually, it does pay... It pays the mortgage broker, the real estate broker, and the real estate attorney, and the seller. It is just a bad idea for the buyer.

Home prices in Boston may be finally turning the corner, a new report from Zillow.com suggests.

After more than three years of declines, Hub home values were essentially flat in July, eking out a .2 percent gain.

As recently as June, Boston home prices were still down 4.7 percent compared to June 2008.

For all you doom and gloomers out there who missed it, one of Wall Street’s top banking analysts is predicting another huge drop in home prices.

Forget about all this talk of a housing recovery, says banking analyst Meredith Whitney.
Home prices are set to fall again, and not by the five or 10 percent typically cited by the pessimists.

Whitney is forecasting a whopping 25 percent decline. That’s on top of the 30 percent drop we’ve already seen since the market’s peak in 2006.

Now that’s one scary prediction.

Since the discussion about appraisal last week turned into a discussion of the value of “green,” here are a few tidbits about green commercial buildings to chew on:

The Fireman’s Fund made a statement this week saying that for commercial buildings, being not green will be a liability in the future. They offer a 5 percent reduction in insurance for green buildings.

Green buildings can boost real estate owners’ bottom line by protecting and building net operating income, attracting and retaining quality tenants and improving the environment. Simply put, green buildings create a triple net effect, benefitting [sic] the owners’ bottom line, its tenants and the environment,” said David Cohen, senior director of real estate, Commercial Insurance at Fireman’s Fund.

The Fireman’s Fund states these risks for non-green buildings:

The economy may be improving, but the foreclosures just keep on coming.

There were an astounding 358,471 foreclosure filings across the country in August, RealtyTrac reports. That’s an 18 percent increase over August 2008, though a slight, less than 1 percent drop from July.

The foreclosure report comes even amid signs that the overall economy is improving modestly, with the Fed releasing a key report yesterday on that front.

OK, we can all debate whether the real estate market is really on the mend or not and whether home prices have finally stopped falling.

But one thing is clear: The once-untouchable downtown condo market appears to be in big trouble.

Now maybe I have just been in denial, but the woes of a luxury condo buyers and developers have mostly failed to impress me. Especially when compared to the misery many foreclosure-riddled urban neighborhoods, in Boston and across the state, have been experiencing.

But regardless of whether the signs of recovery we are seeing are real or just a temporary government-financed bounce, the downtown condo market is not enjoying the same uptick.

Downtown condo sales actually fell in the first six months of 2009, according to the PrimeTime Urban Report, which I detailed in my weekly column for Banker & Tradesman.

J. had a second part to his question about buying off-season:

If we would be able to save a significant chunk (while still getting a quality property) by buying off-season, say 5% or more, it might be worth turning our lives upside down a bit to make it work. We are currently on the September rental cycle, and understandably, our landlord is not keen on letting us go month-to-month in late 2010. Our apartment is not cheap, and we would potentially have to eat a huge chunk of rent were we to sign a lease for 2010-2011 and then break it to move into a purchased home.

There are two parts to this answer:
The first is about the depth of the savings. Yesterday, I wrote about what I expect. It varies house to house. If a really good deal comes along, and it is a good place ---- not a yellow and pink XXL guy’s Speedo --- it could be worth the leap.
The second question is about the financial risk of breaking a lease on an expensive apartment.
I say this over and over: in the real world, percentages are a bad way to calculate savings. Real numbers work much better. J. and his girlfriend need to look at the hard numbers of what they need to save to make this purchase worth it. If the numbers don’t work, they should stay until the end of the spring market, 2010.

J. is a long-time reader. He sent this to me last week:

… I am looking to buy my first house or condo fairly soon, either by mid-2010 or 2011…
I know that housing sales tend to pick up a lot in the spring and early summer, but I have some questions for you about seasonal shifts in average sale price.

Here’s a quick and easy analogy: seasonal house buying is like seasonal clothes shopping. Think: bathing suit. If you go shopping in May or June, there are lots for sale and they are at top price. By September, the pickings are slim or none. But, if you find one that fits, the deal is probably going to be pretty good. It’ll be off in some dark corner of the store, if it is there at all.

So far, 2009 has followed a pretty normal cycle. The presence of short sales and foreclosures is not increasing the supply for my buyers. Many of those homes are too hard to buy, too run down, or still too overpriced for their condition, size and location. I know that in other areas, this is not the case. I write about what I see.

This is what the fall to winter cycle tends to look like:

Don’t worry, this is not a crackpot screed about the Obama Administration secretly plotting to take over another key sector of the economy.

Rather, many of the changes that have created a government dominated mortgage market began with former President George W. Bush.

But the collapse of the housing market and the economic emergency it spawned has thrust the federal government into the role as the nation’s mortgage banker.

A fascinating Washington Post article takes a look at the sweeping changes that have remade the mortgage market.

One stat that floored me: nearly 90 percent of all mortgages being written today are backed by U.S. taxpayers. That’s up from 30 percent just four years ago.

Moreover, Freddie Mac and Fannie Mae, both taken over by the federal government in a bid to prevent further damage to the housing market, now own or back more than $5 trillion in mortgages.

The Federal Reserve, in turn, has also provided a major prop to the mortgage market, buying up hundreds of billions in mortgages.

While this intervention was clearly needed to prevent the housing market from freezing up altogether, unwinding this huge and ongoing subsidy is likely to prove tricky.

Moreover, a new set of costly problems looms on the horizon, experts warn.

That’s the finding of a new report out by Freddie Mac.

OK, I have to say I have qualms about anything emanating from Freddie or Fannie after the events of the past year, but, that said, let’s take a look.

Home prices across the country rose 1.7 percent in the second quarter, according to a survey of homes purchased through mortgages funded by Freddie.

The price recovery, in turn, is broad based, with every part of the country taking part.

It’s a potentially significant finding given the ongoing foreclosure epidemic continues to put tremendous, downward pressure on the market.

Still, if prices are rising, some areas of the country are faring better than others.

In somewhat of a surprise, the New England region posted the smallest gains.

Here’s more news pointing to an uptick in home sales activity.

The National Association of Realtors pending home sales index posted another big gain in July, jumping 3.2 percent.

It’s the sixth monthly increase in a row and a double digit rise from July 2008.

But a funny thing is happening on the road to real estate recovery.

The outrageously priced luxury market, which pumped so much hot air into the housing bubble, is now the one hurting.

Unsold homes worth more than $750,000 are clogging the market, with nearly 17 months of supply, according to NAR. That’s nearly double the overall supply of unsold homes, which weighs in at over nine months.

Home prices in Greenwich, a haven for wealthy hedge fund managers, has fallen 24 percent to $1.5 million, Fortune notes.

There are clearly growing signs of a turnaround in the real estate market.

But will the rebound unfold quickly enough to bail out an array of new, market-rate condo projects in Dorchester and Mattapan?

Despite some really creative efforts by the developers involved to lure potential buyers, the jury is still out on this one.

Am I not getting something here?

The real estate market is finally showing some solid signs of hope. Yes, foreclosures are still worrisome, but sales are rising, both on a month-to-month and year over year basis.

Prices, meanwhile, also seem headed in the right direction.

Check out the coverage of the July numbers released yesterday by the Warren Group and the Massachusetts Association of Realtors. Both groups are reporting a double-digit bounce in sales.

The numbers, nationally, are also up.

But among Realtors, President Obama’s numbers are down, real down.

The president’s approval rating slipped from 57 percent in the second quarter to 42 percent in the third quarter, according to the recent HomeGain survey of Realtors.

A whopping 40 percent "strongly disapprove'' of his job performance so far.

Wow, just imagine what will happen if we start seeing runaway home prices again.

According to Lawrence Yun, chief economists for the National Association of Realtors, we have.

"The housing market has decisively turned for the better," said NAR chief economist Lawrence Yun in a statement. "A combination of first-time buyers taking advantage of the housing stimulus tax credit and greatly improved affordability conditions are contributing the higher sales

For a change, the battered real estate industry finally appears to have something to crow about again.

Sales of homes and condos soared 7.2 percent in July, the largest monthly gain in two years.

Resales rose more than 13 percent in the Northeast, the highest in the country.

Yet before anyone rolls out the champagne, here are a few sobering thoughts to ponder.
http://www.marketwatch.com/story/us-stock-market-sectors-buoyed-by-short-term-aid-2009-08-24

Here’s more evidence the foreclosure crisis is not going away anytime soon, it is just changing its stripes.

The number of homeowners behind on their mortgages rose to a record 9.24 percent, Bloomberg reports, citing a new report from the Mortgage Bankers Association.

In addition, the percentage of homes in foreclosure, at 4.3 percent, is the most since the trade group started collection the data 30 years ago, while loans overdue by 90 days is now just under 8 percent, another record.

The continued surge in bad loans is now being powered by rising unemployment, even as foreclosures related to subprime loans have begun to decline, the MBA’s chief economist tells the news service.

For many homeowners, a little bit of good news sure goes a long way.

While there are signs the battered and tattered real estate market may be finally stabilizing, it’s not the kind of news that you break out the champagne over.

That is unless you are a homeowner.

The latest Zillow.com Homeowner Confidence Survey illustrates the continued gap between market reality and the at times almost delusional sense by many homeowners that their properties are somehow unique and untouched by these trends.

A shocking 81 percent of homeowners tallied in the latest Zillow.com survey believe the value of their castles will not decline in the next six months.

I never had a problem with the idea of promoting an “ownership society.’’

But the Bush Administration took what was an honorable idea and destroyed it, using it as a mask to hide the fact there was no real housing policy during the boom years other than anything goes.

Instead of an ownership society, we’ve wound up with Foreclosure Nation.

Given this disaster, it’s not surprising that President Obama is now moving to bolster the supply of affordable rentals.

The Globe takes a badly needed look at this pretty key shift in housing policy, which is seen as a broader repudiation of the ownership society concept.

Yes, home sales are rising. But foreclosures appear to be going up even faster.

RealtyTrac’s latest report shows foreclosures rising 7 percent from June to July. Compared to July, 2008, we are looking at a whopping 32 percent increase.

All told, lenders filed 360,149 foreclosure notices in July.

By contrast, home sales rose in the second quarter at roughly half that pace – 3.8 percent.

One of the few bright spots appears to the performance of the Boston area, which saw foreclosures fall 40 percent in July compared to the same period the year before.

Will rising foreclosure rates swamp the housing recovery?

Hopefully not, but this race looks too close to call just yet.

Sales activity has certainly been picking up across the country.

But providing the fuel for this surge has been a flood of foreclosed homes sold at dirt cheap prices.

It’s a Catch 22, of sorts. Buyers in a recession are going for the bargain models, which happen to be foreclosures.

But of course that is also keeping prices falling, which in turn helps laying the groundwork for more foreclosures.

The National Association of Realtors latest quarterly report offers a telling stat, with foreclosures and short sales accounting for 36 percent of all transactions. (The median home price fell 15.6 percent in the quarter, to $174,100 from the same period in 2008. That, though, was 4 percent gain over the first quarter, when the median price had fallen to $167,300.)

Home values fell more than 12 percent in the second quarter, Zillow.com reports.

Certainly, the pace of decline appears to be moderating, with the size of decline in home prices during the spring quarter having shrunk for the first time in two years.

And, if we are talking about ranking the rate of decline from worst to best, Boston again appears to be one of the relative winners, with prices falling 6.4 percent to $316,000.

Still, there’s still no sign of a dramatic turnaround amid rising foreclosures and a rising tide of underwater mortgages, Zillow reports.

Housing market bears need not despair.

Just when it looked like we were riding a wave of relatively upbeat news on the housing market, along comes Deutsche Bank with a report sure to restore a little gloom.

In case you missed it, the bank is predicting that nearly half of all U.S. homeowners will be underwater on their mortgages by the first quarter of 2011.

What’s more, that represents an almost doubling of the current rate, with 26 percent of homeowners currently stuck in the unenviable position of owing more on their mortgage than what their castles are worth.

In some markets, that may rise to astonishing 90 percent. Markets poised to be almost completely submerged by a tidal wave of falling home prices include Miami, Las Vegas and Modesto and Merced in California.

The report predicts a further 14 percent decline of home prices across the U.S. into 2011.

Still, not everyone is unquestioningly swallowing this report.

This is turning out to be a bad PR week for the banks.

First we learn the biggest financial institutions, despite tens of billions in federal incentives, are only managing to modify a small percentage of the millions of problem mortgages out there.

Now it turns out homeowners battling desperately to avoid a foreclosure filling and sell their home, even at a loss, can’t win either.

Only 23 percent of short-sale offers actually close, according to a recent survey of 1,300 real estate agents, USA Today reports.

The article offers a rather distressing look at the still formidable obstacles homeowners face trying to dodge the foreclosure bullet.

What’s with these guys?

After getting untold billions in various federal bailout specials, you would think the nation’s largest lenders could play ball on mortgage modifications.

Apparently not, as is clear in the coverage by the Globe and other media outlets of the Treasury Department’s new report card on mortgage modification efforts by the big lenders.

The Obama Administration earlier this year rolled out $50 billion in incentives to prod lenders to help modify the mortgage of as many as four million distressed homeowners.

So far, only a meager nine percent have been signed up for a three month trial modification program. Basically, make your payments during that period and it goes permanent.

But the biggest banks couldn’t even meet that rather anemic threshold.

Check out the latest pending home sales report, which should throw a modest lifeline to the few surviving housing market bulls out there.

They are up for the fifth straight month in a row, for a 3.6 percent gain in June, the National Association of Realtors reports.

Overall, the trade group’s pending sales index is back to pre-September 2008 levels (as in before Lehman’s collapse) and it is the highest it has been in two years.

That said, hold the champagne. Sales may be on the rise again, but they are crawling back from some pretty low levels.

My recent post about early signs of a real estate turnaround got a slew of heated responses.

There’s clearly a chorus out there hoping, praying, that prices will continue their downward slide

Check out some of the comments on my post, “Finally, some good real estate news, especially for Boston.’’ Many offered fact based rebuttals to the idea the market may be turning around, but underlying many of the responses is the subtext that if you are arguing the market is stabilizing, you must be some scheming homeowner or worse, evil-doing Realtor.

Here’s what one reader had to say:

“Honestly, with housing prices in Boston still out of reach for so many people that live here, how is a price increase good? Oh, right. Good for existing homeowners.”

Believe it or not, I am sympathetic to the prices-are-just-too-high- around-here crowd.

Here’s more proof that the foreclosure crisis is not going away anytime soon.

Instead, it’s just moving into new territory.

RealtyTrac’s latest report shows evidence of declining foreclosure activity for the first six months of the year in metro areas in Ohio, Indiana, Michigan and California that have been the hardest hit.

But there’s been a rise in activity in states as widespread as South Carolina, Idaho, Utah and Oregon.

What we are likely seeing, the report suggests, is a falling off of subprime related foreclosures and a rise in distress tied to the poor economy and still rising jobless rates.

The Boston area was one of the first major metro markets in the country to see the housing boom go bust.

Now, after nearly four years of falling prices and sales, are we poised to lead the nation out of this deep housing funk?

That idea might have seen laughable just a few months ago - and it may still be somewhat of a stretch. After all, there remain nagging questions as to whether prices have fallen deeply enough here to spark a real housing market recovery.

Yet the idea that Boston just might come out of the downturn sooner than other major markets across the country is a bit more plausible now after a spate of mostly positive reports released yesterday.

The Warren Group and the Massachusetts Association of Realtors both reported yesterday that price declines for single-family homes, when measured on a year over year basis, have slowed into the single digits.

But both sales and prices continued a month-over-month winning streak extending back into the spring, with the median price of a single-family home now back $300,000 for the first time since August, 2008, MAR reports.

Nationally, the performance of the Boston market is also starting to draw attention. The latest Case-Shiller numbers has the Hub as one of only five major metro markets to post two straight, month-over-month increases in home prices. A slight increase of .4 percent in April turned into a more solid gain of 1.6 percent in May, though prices in Boston, as in other markets across the country, are still down compared to 2008 levels.

That’s the take of a new study, which finds housing affordability has fallen back to levels not seen since the start of the decade.

The report, by financial services tech firm Fiserv, notes the home price/family income ratio at the end of the first quarter was just seven percent above 2000 levels.

The study looked at prices and family income in 375 housing markets across the country.

In 10 percent of these markets, prices have fallen below 2000 levels, or, in other words, back to pre-bubble values. The median sale price across the U.S. is now down to $167,300.

Home sales were up again yesterday nationally, rising 3.6 percent over June.

It was the third straight, month-over-month increase, and the latest sign that life of some sort may be finally returning to a sector that was all but dead few months ago. (Of course, prices just keep on falling, with the median sale price nationally of $181,500.)

But just as the real estate market appears to have pulled out of its nose dive, more trouble appears to be brewing on the foreclosure front.

The latest Massachusetts foreclosure numbers show fewer homes being disposed of at bank auctions, but a spike in the number of foreclosure petitions.

Just call it the battle of the dueling statistics.

As the housing market hits bottom, you can alternately become either extremely depressed or mildly elated depending on what stat you look at.

Just take Thursday, when another gloomy batch of foreclosure numbers was offset by signs of renewed confidence among home builders and a modest rally on Wall Street after a new prediction the recession will end in a matter of months.

It could be signs of a true turnaround building in the Boston market.

Or maybe we are just one of these high-priced, low construction markets where prices have hung on more stubbornly than in condo deluged Miami or Las Vegas.

Either way, prices are up again, on a month over month basis, in the Boston market, according to yet another market survey.

The Boston area saw home prices jump 3.7 percent in May over April, contends Colorado-based Integrated Asset Services in a new report.

The Hub outpaced the Northeast as a whole, with the region reporting a 3.2 percent gain in prices.

That is the intriguing, if somewhat depressing, idea floated by Yale economist and housing guru Robert Shiller in an interview posted on the Yahoo! Finance website.

Speculative overbuilding in markets like Phoenix and Miami helped inflate the last housing bubble, the one we are all trying to dig out from.

But Shiller notes singled out Boston as one of the markets that has performed relatively well during the downturn. And he raises the question whether the Hub might become ground zero for a new housing bubble.

He noted the volatility of the Boston market in recent years as something that, apparently, makes it vulnerable to bubble housing economics

Here are two more interesting takes on the housing downturn.

The Wall Street Journal compares the performance of the West, where there was a huge surge of new housing, with that of the Northeast, which did not see overbuilding, and draws some interesting conclusions.

In the Northeast, the inventory of homes for sale has risen 17 percent since 2005, compared to more than 70 percent in the West.

Still, the Journal piece notes that overbuilding, coupled with foreclosures, has brought prices down hard and fast in the West. Sales there are rising again, while still falling in the Northeast.

Hey, back during the boom, it sounded like a good idea.

Developers rushed to convert Nantucket’s grand old hotels in luxury vacation condos.

The plan was to tap into demand from the merely wealthy looking to vacation on the elite resort island for which buying a multimillion-dollar waterfront villa is out of reach. Plus buyers would get all the comforts of a resort hotel as well, and no need for pesky household maintenance.

Of course, like all promising ideas in real estate, once one developer got the idea – I’m thinking Newton real estate mogul Steve Karp and his purchase of the White Elephant – everyone and his brother rushes in.

Now we are starting to see the fallout from this gold rush gone bust, with TD Banknorth moving to foreclose on its $40.5 million construction loan to developer Robert Mathews and his half completed conversion of the historic Point Breeze hotel into a vacation retreat for the Nantucket summertime wannabes.

The new Case-Shiller numbers are out and there’s a big sigh of relief.

Home prices fell 18 percent in April compared to the previous year, down from 19 percent over the winter.

Whew. Well we definitely dodged that one.

Seriously, I guess that’s how bad things have gotten when there’s rejoicing among some industry analysts over a nearly 20 percent drop in home prices.

Still, to give those trying to find a silver lining in these numbers their due, it appears to be a sign that at least the rate of decline is slowing.

Forget about home prices for a minute.

If you want something to worry about, take a look at overall sales volume.

The latest decline in single-family home prices in Massachusetts are all over the headlines today.

The Warren Group, the Boston-based publisher and real estate data firm, reports the median home price fell 13 percent in May from last spring, to $280,000. The Massachusetts Association Realtors pegs the decline at just under 12 percent.

Not much new there.

But you have to go back to the dark days of the early 1990s to see home sales activity this low.

John responded to my entry about making low offers with a good link showing the continuing foreclosure crisis. The seller I was facing-off with over an $80,000 difference of opinion about price was not a lender-owned or short sale property. But John’s point remains. He wrote:

Hi Rona, Have a look at the graph in the middle of this page:

There's the reality of your post at the macro level. I drive past several unkept properties, likely abandoned, on my current 12 mile back road commute. When banks get serious about selling these, I think we're looking at the next leg down...

I get John’s point. Those foreclosed and unsold properties are sitting around. They are hard to buy. Frequently, they are not worth buying. At least not yet. John sees them every day on the way to work. I see them every week at work.

Last week, I also wrote on appraisal hassles. Foreclosed properties that are used as comparables are also driving down the price that lenders will cover for mortgages.

OK, I probably do too much moaning and groaning about the real estate market.

But for all the trouble the market’s woes have generated for millions of homeowners and for the global economy, it is also a time of unprecedented opportunity out there for at least some folks.

If you are a renter with a few bucks in your pocket, you have the opportunity to buy a home or condo at prices we haven’t seen in years.

But you also have some great deals out there now on the rental side as well.

Renters are increasingly finding themselves in the driver’s seat as the number of vacant apartments rise to levels not seen in years, the Globe reports.

For all of you out there rooting for another big tumble in real estate values, here’s some happy news for you.

Home prices across the country will fall another 14 percent, with New York City and Orange County leading the downward charge, a new study by Deutsche Bank AG says.

Before the dust settles, home prices will have fallen nearly 42 percent from their peak, Bloomberg News reports, citing the report’s author.

A client of mine wrote me about her refi:

So, the question: we are in the midst of refinancing, and the appraisal has come in low ($470K). Got any advice on challenging an appraisal? Also, there are 2 potential comps on the market right now. Both are Sale Pending. One was listed as a comp but not weighed in the result, as far as I can tell (I assume because sale hasn't closed). The other was not considered, perhaps because it wasn't yet UAG as of the time the appraisal was done last week. I know they won't necessarily turn out to be helpful, but is it ever possible to find out from a seller's agent when the closing is supposed to take place, and even what selling price was agreed on? I think we have enough cash to basically repay a bunch of the principal and take a much smaller refi loan, but we'd prefer not to have to do that. If we can bump the appraisal up by even 20K, that would make a big difference.

This question brings up two things that I have been thinking about bringing up, here at Boston.com:

1. Should you time your refi, so that you can take advantage of the higher prices that show up in the spring?

In every market, bear and bull, the housing prices around here are higher in the spring and early fall, relative to the rest of the year. When the prices were double-digit inflating, it was harder to see. But even then, summer and the dead of winter were still the times for the lowest prices.

Even now, prices are going up in several towns compared to last winter’s sales. They are likely to go down as the year goes on. This happened last year, too. Many towns showed price gains in the first half of the year, but fell overall in 2008.

Has anyone had luck with timing their re-fi appraisals?

You don’t have to live near Dorchester’s notorious Hendry Street to feel the pain from the foreclosure epidemic.

Hendry Street became notorious locally a year or two ago as the epicenter of the foreclosure crisis in the Boston area, a foreclosure alley of boarded up triple-deckers.

But it can take just one foreclosure to spoil the party and bring down real estate values in your neighborhood. And if that hapless homeowner happens to be your next door neighbor, then you are really out of luck.

Those, anyway, are some of the findings on the impact of foreclosures on home values in a recent report by the Center for Responsible Lending. The Times takes an interesting look at the report, and in particular new research that puts some dollar figures on the impact this mess is having on homeowners around the country.

Sure, it’s not the best time to be opening a new, luxury condo project in downtown Boston.

But there are actually worse times to have done this – such as last fall when the financial system and the entire economy appeared on the verge of a Great Depression like collapse.

Those are my thoughts anyway as I look over the news that 45 Province Street, the Abbey Group’s new deluxe high-rise near Downtown Crossing, has finally opened.

Appraisal discrepancies… That’s broker-speak for “the house is not worth what the buyer wants to borrow on it. The investor will not cover that mortgage.” Jenifer McKim reported on this for The Boston Globe this week.

Usually, appraisal discrepancies happen when a market is going up. Let me explain:

Let’s use something fairly perfect: condos in the same building that are the same size. They should be worth about the same, unless one has over-improved the interior with some over-the-top kitchen or flooring. There will be slight variations for view and balconies, but let’s pretend that none of the views are much and everyone has the same balcony. Also, let’s say we are in 1999.

Condo one sells for $279,000 in January and closes in February. Condo two sells in February for $282,000; closes in March. Then the spring market hits. Everything in the town goes up 10 percent. February 15th, condo number three comes on the market at $299,000; March 1st, condo four comes on at $309,000. March 15th, condo five comes on for $319,000.

Some buyers start condo shopping in March. They see $299,000 as a bargain, compared to $309,000 and $319,000. Even if they looked at the properties that recently sold, this was 1999; buyers were more resigned than I was about accepting the presumption of an annual price increase.

Sometimes the first condo after the increase didn’t appraise. Rarely, the second one wouldn’t. The third one had no problem. That was the reality when the market was kicking up.

OK, I have a tendency to label folks predicting a price collapse here doom-and-gloomers – which may or may not be fair.

However, it’s easy to get fed up with housing prices around here.

Even amid the downturn they are simply too high. I found myself recently shaking my head over the sale of a ranch in Weston for $2 million.

Must have been some ranch.

Yet pining for a California-style price collapse is not going to make it happen here.

It looks like the spring market is not dead yet.

While the latest home sales numbers have been gloomy, the latest number on pending sales, contracts just signed but a month or two from closing, are encouraging, to say the least.

The Northeast has seen a 32 percent jump in pending sales from March to April, the National Association of Realtors reports.

Here are some foreclosure stats to brighten up your day.

There have been 1 million new foreclosure filings across the country – all since January.

And that number is expected to more than double by year’s end, according to a depressing new report released by the Center for Responsible Lending.

That’s a new foreclosure filing every 13 seconds.

Have we seen the end of 4.75 mortgage rates?

I hope not, but the signs are not encouraging.

The sudden surge in interest rates has some homeowners who were daydreaming about refinancing kicking themselves, while others who have applications in the pipeline scramble to finish their paperwork, the Globe reports.

I find myself in the latter category, my wife and I having just completed a $200,000 addition to our Natick fixer-upper. We are now preparing to wrap the $170,000 we financed through a construction loan, along with the preexisting debt, into a new, $417,000 mortgage.

Sam Zell is far from perfect. His decision to go from real estate mogul to media titan has been nothing short of disastrous.

Instead of saving the newspaper business, Zell helped drive the once-proud Tribune Co. into bankruptcy.

But as a real estate guy, Zell knows his stuff. He built twin office and residential empires under the Equity Office and Equity Residential names, and then managed to reap billions when he sold long before the bubble burst.

So Zell’s take on the current housing market is both timely and interesting.

It was certainly a jaw-dropping decline, the 19 percent decline in home prices in the nation’s top 20 metro markets.

But buried in the Case-Shiller indices’ first quarter report was some pretty interesting news about the health of the Boston area market.

And how you view it depends where you stand on the spectrum from housing market bear to housing market bull.

Boston was one of just a handful of cities to avoid a double digit, year- over-year decline in price.

Home prices in the Boston fell 8 percent during the first quarter, putting in league with Cleveland, Dallas, Denver and Charlotte, all of which also experienced middling declines.

All the statistic junkies out there are going to love this question.

But really, it’s legitimate and it’s one I grapple with. While year-over-year comparisons are the gold standard, are there times when it makes sense to look at the month over month trends as well?

It’s a question, as you will see, that is pretty key when it comes to interpreting April’s home and condo sales numbers.

The latest home sales numbers, just released by the Massachusetts Association of Realtors, are certainly nothing to write home about.

I guess the only thing tougher than trying to sell a condo these days is actually buying one.

The Globe reports that would-be condo buyers are facing a gauntlet of new fees and tough new requirements from lenders.

Lenders are requiring nothing short of 20 percent down from condo buyers. And private mortgage insurance companies, which traditionally filled the gap for buyers unable to put up a big down payment, are also shying away.

And that’s just for starters.

There’s definitely a case to be made that home prices in Massachusetts are still overinflated.

Hey, I think the same thing every time I walk past the Natick train station and look at the half empty condo complex next door. The developer had wanted $600,000 and up for a view of the tracks and the back of the police station, now he’s bargaining down.

Anyway, for those of you betting that prices will continue to fall here, the recent forecast by the
New England Economic Partnership should be to your liking.

The nonprofit economic research group predicts that home prices will continue to fall through both this year and right through 2010 as well. Sales, though, may be starting to hit bottom, the group contends.

If that trend holds true, that would certainly bring prices back down to earth. No more $600,000 train track condos.

From opposite coasts, two pretty interesting, and promising, pieces of data.

Both point to signs the stranglehold rampant foreclosures have had on the nation’s housing market may be starting to ebb, albeit slowly.

Here in Massachusetts, the number of foreclosure deeds plunged in April, dropping 44 percent compared to the same time last year, for a total of 755, according to The Warren Group, the Boston-based real estate tracking firm and publisher.

Foreclosure filings –basically what’s in the pipeline – are down 16 percent as well so far this year.

Meanwhile, out in Los Angeles, a new survey points to signs that non-distressed homeowners are starting to put their properties back on the market.

Too bad Karl Case’s theory isn’t working out right now.

The Wellesley College economist and real estate expert has noted that when housing starts fall below the 1 million start threshold, that often proven to be a reliable barometer signaling the start of a housing recovery.

But the latest housing numbers would seem to dash hopes for a rebound in the residential construction industry. And we are now far below the million start threshold –and still falling.

Housing starts fell nearly 13 percent in March, down to an annualized pace of 458,000.

Are sellers finally crying uncle?

Well, maybe everywhere except here in Massachusetts.

Hammered by the worst downturn in at least two decades, would-be sellers are getting more realistic about what their homes will fetch on today’s market, according to a nationwide survey of real estate agents by HomeGain.

One key finding is that 36 percent of home sellers believe their homes should be listed 10 to 20 percent more than what their real estate agents recommend.

Doesn’t sound like progress until you match up the results of this latest survey, which covers the second quarter, with the 45 percent who believed their homes were being undervalued by 10 to 20 percent back in the first quarter.

In another sign, the number of homebuyers who think the market is still overpriced has fallen to 59 percent, down from 64 percent in the second quarter.

Still, the numbers for Massachusetts indicate the battle over pricing may still have a ways to go.

Now even the state’s most expensive suburbs and resorts are starting to feel the heat of the downturn.

The Globe ran a pretty telling story on Nantucket over the weekend, once thought to be an impregnable fortress of ever rising real estate values all but untouched by the downturn.

No more.

Since January, 57 properties on the island have been served foreclosure notices. Overall, sales and prices are also down – the median home price fell to $1.6 million by the end of March, or down 20 percent from a year ago.

Nantucket, though, is hardly alone. With stock market turmoil and a bitter recession starting to claim high-paying jobs in financial services and other key industries locally, home prices in some of the Boston area’s more exclusive suburbs are also starting to fall.

Are homeowners here in Massachusetts and across the Northeast the most deluded in the country?

The results of Zillow.com’s quarterly Homeowners Confidence Survey certainly raise that question.

Roughly a third of homeowners surveyed by Zillow.com in the Northeast believe the value of their little piece of the market is headed up, up and away over the next six months.

By contrast, just 23 percent saw it falling.

Overall, just 57 percent think the value of their home fell over the past year. Instead, nearly 80 percent of homes across the Northeast fell in value.

Welcome to the Bay State, the bright light of our country’s battered real estate market.

The national real estate picture still looks pretty rocky.

Just take a look at the first quarter numbers, with another record breaking price drop. The median price plunged 14 percent to $169,000, the National Association of Realtors reports.

But while the naysayers will jump all over this one, the local market is looking brighter by comparison.

So here’s another of these awful negative equity reports.

Zillow.com reports that about a fifth of all homeowners across the country, or nearly 22 percent, are underwater, owing more on their properties than they are worth.

Maybe even more disturbing is how rapidly that legion of underwater homeowners is growing. Back in the third quarter, it was a still high, but not as alarming, 14.3 percent.

Of course, the big driver of this trend is falling home values, which posted a 14.2 percent, year-over-year decline in the first quarter, down to median sale price of $182,378.

And Boston is right up there when it comes to this trend, with 20.6 percent of local homeowners now underwater on their mortgages. Again, the driver here is falling prices, with the median Boston area sale price now down to $300,605, for a 13.5 percent drop, according to Zillow.

The housing bears were certainly roaring after last week’s batch of gloomy local sales numbers.

Both sales and prices were down yet again when the Warren Group and the Massachusetts Association of Realtors came out with their numbers for March.

The only problem, I noted in my post yesterday, is that these numbers reflect sales inked a couple months before. Instead of offering a glimpse at the spring market, the numbers instead simply restate the obvious – that the real estate market, and the economy, were operating under a very dark cloud this past winter.

It also doesn’t jibe with the growing reports of lively open houses. I found myself dodging traffic from more than one open house Sunday when I was out for a run near my home in Natick.

I feel better about that assessment after seeing Monday’s numbers on pending home sales put out by the National Association of Realtors.

The trade group’s index of pending sales is up by 3.2 percent over February. More significantly, it is also up 1.6 percent over a year ago as well.

I was in Quebec for most of last week, celebrating my 10th wedding anniversary.

If real estate is getting cheaper here, it’s going for a song in the lovely old city perched over the St. Lawrence. I even entertained a few idle fantasies about buying a cottage on the I'lle d’Orleans, a Cape Cod like island with spectacular views of nearby Quebec City.

Still, a getaway place you can’t get to more than two or three months of the year does not make much sense to me. If winter is hard, it’s nothing short of brutal in the real north.

Anyway, I apparently missed another batch of gloomy home and condo sales numbers back here.

The median sale price for a single family home in Massachusetts fell more than 18 percent during the first quarter, to $253,500. Condos were hammered, falling roughly 17 percent to $220,100, according to the Warren Group.

It’s pretty clear prices are going to keep on falling, and need to, for the market to recover.

Sam Schneiderman, Broker-owner of Greater Boston Home Team continues his Monday series with a timely discussion about appraisers and the upcoming changes in the way they will interact with lenders.

Appraisers estimate the market value of property. They are supposed to provide independent, unbiased opinions of value based on their research and analysis of the market and property that they are evaluating. Appraisers are used by lenders to assure that the property that they are lending on is worth enough to secure the loan if the borrower defaults. Appraisals are also used for estate purposes, eminent domain and any other reason someone wants to know the value of a property.

A residential appraisal primarily involves surveying sold properties, then selecting the properties that are nearest, most recently sold and most similar to the property being appraised. Those properties are called “comparable sales” or “comps”. They are placed on a grid with details like size, condition, number of baths, parking, updates, etc. Appraisers makes adjustments to the sale prices of comps approximating the dollar value that the average buyer would pay for those features or subtract for missing features. For example, let’s say that a condo without parking is being appraised and a comparable condo with parking sold nearby. If parking is worth $10,000, that amount is subtracted from the sale price of the comp to arrive at the estimated value of the condo being appraised.

There are two ways to appraise property. The correct way is to do research and analysis, then figure out the value. The other way is to know the desired value and find recent sales to support it. Which one do you think takes less time and is more profitable?

I was an appraiser for 9 years, managing and training 40 appraisers and signing off on their appraisals as review appraiser. When property could not appraise for the sale price or the amount needed to refinance, some lenders questioned if we missed something in the process, usually because the owner, seller, or listing agent thought that the property was worth more than it appraised for. Sometimes the mortgage officer or lender was motivated by potential profit. Unscrupulous lenders would not order appraisal for a while after a property failed to appraise. Since I did not appraise to targeted values, eventually those lenders went elsewhere. Fortunately, there were lenders that wanted accurate appraisals and they became long term clients.

Some banks hired staff appraisers and others formed appraisal management companies (AMC) to have more control over the appraisal process. Some of them pressured appraisers for values, others did not.

We all knew this was coming, the question was when.

Downtown Boston’s luxury condo market is finally starting to come back to earth after defying gravity – and a severe housing and economic downturn – for two years.

The Globe reports the median sale price of luxury condos plunged 19 percent in the first quarter, compared to the first three months of 2008. Overall sales are down 42 percent.

In a reversal of some long standing trends, that is actually worse than the condo market as a whole, which saw median prices fall by 14 percent and sales by 33 percent.

It’s pretty clear the housing downturn, even as it appears to be hitting bottom, is also shifting gears.

I guess it could have been worse.

Home sales were down again in March, but hey, it’s not as bad as what we were seeing in late 2008.

That’s how a number of industry analysts are greeting the somewhat disappointing, but not entirely unexpected, news that home sales fell 3 percent from February.

Year over year, sales were down more than 7 percent in March compared with March 2008, the National Association of Realtors said in its monthly report.

That’s hardly reason to break out the champagne.

Still, if stabilization is the goal now, the first three months of the year were not that bad in this regard.

It’s too early to say whether the housing market has finally hit bottom.

Conceivably we could be in for a couple more bumps and jolts before a pretty rough landing.

But Wednesday’s report by a key federal agency that housing prices rose in February for a second straight month is certainly encouraging.

In case you missed it, the Federal Housing Finance Agency says home prices edged up .7 percent in February following a 1 percent gain in January.

New England prices rose even more, by a relatively robust 2.2 percent.

Here’s another sign the housing market still has a long away to go.

In New Jersey, a housing analyst is predicting that it will take until 2020 before prices in that state get back to 2005 levels.

My first reaction was that this sounds like more of the mindless doom and gloom that is popular in the market right now.

If the run-up in prices was driven by herd mentality, at times it seems like the never-ending, downhill slide in housing prices is being driven by a similar phenomenon.

But then I started thinking. After all, 2020 is not as far off as it may sound – just 11 years.

And that is about the time it took for the Bay State’s housing market to rebound from the beating it took back in the early 1990s.

It’s shaping up to a big week for the housing market.

All eyes now are on three key housing indicators. And by the end of this week, we should have a much better idea whether the signs of progress seen over the past few months are indeed the beginning of the end of the slump, or rather just a flash in pan.

That, anyway, is the buildup some of the business press is giving to the spate of housing market data out this week.

Prices may be falling here in Massachusetts. The question now is, have they fallen far enough?

According to a new poll out of the University of Massachusetts, the answer is a resounding no.

More than 63 percent of state residents surveyed said housing affordability is a major issue, right up there with jobs, while another 45 percent said high housing costs make it harder to make ends meet, according to the UMass Donahue Institute/Citizens Housing and Planning Association Annual Poll.

Nearly 35 percent said they or a member of their immediate family were considering moving out of Massachusetts due to high housing costs, while another 64 percent believe high housing costs are hurting the local economy. That first stat is doubly troubling given the big price declines we have already seen in both homes and condos over the past two or three years.

At the end of March, I asked my colleagues in the Massachusetts Association of Buyer’s Agents about what they are seeing with their buyer clients at the start of the spring market. I call these the “buyer agent eye view” of the market.

I am curious if buyers out shopping are running into what we see, too.
First, what I’m seeing:

My clients are frustrated. One told me: “I am so sick of having people at my office tell me that I should be able to buy anything I want at $20,000 below asking price. I can’t find anything decent to buy at any price!”
I have clients who are not abnormally picky who cannot find good properties to buy. On the other side of the coin, I am seeing prices dropping on less desirable properties, with compromised locations, in need of updating, or smaller houses and condos.

Because asking prices have a tenuous relationship with value, I don’t judge how well my buyers do based on asking price. I have clients who have been outbid. I have clients who are paying full price, and I have buyers who are negotiating well below asking price. It depends on the property. My recent experience is that some properties are winners and the rest are truly losers.

Well it’s just pouring good news in the housing market now.

Just kidding. But after a few pretty depressing years, there are finally some promising rays of hope out there on the real estate horizon.

After sounding like an Old Testament prophet in his first month or two in office, President Obama yesterday sounded fairly upbeat yesterday as he credited his hapless treasury secretary with bringing rates on 30-year fixed mortgages down to an historic low of 4.78.

He touted he called the “good news’’ for American families and went into an almost salesman-like pitch encouraging homeowners to refinance their mortgages. He even had a few happy customers – families who had lowered their bills – as a backdrop.

The president noted refinancing had jumped 88 percent while Fannie Mae had seen its refinancing volume jump to $77 billion, its biggest gain in six years.

Here’s a reminder that the housing downturn is global.

Housing prices in China are stagnant as that country’s growing real estate market works through a glut of homes, Bloomberg reports.

Home prices fell a record 1.2 percent in February across China. I guess that is pretty bad over there, though, at this point, that sounds like a pretty good month here in Massachusetts.

Housing prices in China’s top 20 cities fell 5 percent in March, with Beijing and Shanghai having the biggest gluts of unsold homes.

Developers have been responding with all sorts of incentives, while the government has dropped interest rates and started to pump stimulus money into the economy.

Sounds familiar, right?

I will be providing more complete answers than the ones I gave on the chat this Monday. I will do my best to cover what I know or can find out about. (For example: I am polling agents in other regions of Massachusetts about what they are seeing in the spring market.) If your question went unanswered, send me an email.

This, from the chat:

em3’s comment:
as buyers, we are refusing to pay top dollar for homes that aren't worth it, (i.e. house needs gut job, rehab, school system is only ok, etc.) What if we see a fair market value as below the 5-20k you mentioned?
I answered:
that's not fair market value, that's your gut market value. Fair market value means someone else is paying that much for something like what is for sale.
The term for people who will only buy something for less than what it is worth is RENTER.
OK, now that I have the rude joke out of my system…
you may be able to get $5-10K off a fair market value if the seller is in distress. I research the sellers to see if I can find something that indicated distress.

Here’s a longer, and less snarky, answer to a good question:

Real estate is a very imperfect market. Perfect, in this sense of the word, means one thing is like another. No two houses are the same. Even when they are first built, little differences in light, and lot, and finishes are built in. Then after 10 or 30 or 120 years, rooms have been added, walls knocked down, repairs done or not done.

So, I agree, there is no single “fair market value” established by a Comparative Market Analysis (CMA); it’s usually a range of $5,000 or so. A thoughtful person with the skill to calculate for the imperfectness can get an estimate of what the property should sell for based on what other people have been spending on properties like it. As always, the devil is in the details. CMAs are not based on a single house that sold nearby. It involves looking at three or more properties and the market trends. This is a far better way to sell a house then waiting for a buyer to buy based on a gut sense of value (which for a seller is inflated, just as for a buyer it is deflated.) CMA is the best tool we have.

Here’s some more data that will surely get all the housing market bears out there riled up and indignant.

In what looks like another glimmer of hope in the battered real estate market, the National Association of Realtors is reporting that its' pending home sales index rose in February to 82.1.

It’s a modest increase over January and just a bit below where it stood in February 2008.

Concurrently, and this is no coincidence, NAR’s housing affordability index rose to a record high of 173.5 – more than 36 percent higher than a year ago.

The Northeast and Midwest showed the biggest gains in affordability, at 10.6 percent and 14.5 percent respectively.

The latest Case-Shiller numbers surely have the housing market bears roaring again.

Home prices in 20 markets plunged 19 percent year-over-year in January.

That’s a record drop and it’s succeeded in reviving the gloom and doom atmosphere that has increasingly pervaded the residential market amid the economic downturn.

There’s no disputing the numbers – Wellesley College real estate guru Karl Case is as good as it gets.

Yet, in this case, the numbers, which date to January, may not fully reflect the growing number of signs which have begun to emerge just in the past few weeks that both the housing market and the economy appear to be finally hitting bottom.

Consumer confidence, retail and even auto sales have shown small, though not insignificant gains over the past few weeks.

Home sales may be starting to pick up, at least nationally.

But one category is still getting hammered in this seemingly never-ending housing downturn - vacation homes.

Sales of vacation homes plunged 30 percent last year compared to 2007, according to numbers released yesterday by the National Association of Realtors.

Tighter lending standards and a down economy are some factors being blamed.

It doesn’t take a rocket scientist to figure out that most people right now are worried simply hanging onto the jobs and homes they already have.

Still, if you have the guts and a desire to snap up a little vacation get-away, this might be the time to do it.

National home builders like KB Home appeared near death just a few months ago.
Housing starts were at historic lows, with no end to the free-fall in site.

But the latest housing figures show a modest rebound in new home sales – and point to an emerging new trend as well.

Los Angeles-based KB is reporting success with a new, smaller home model that is the company’s answer to the flood of foreclosed homes that have provided dirt-cheap alternatives for prospective buyers.

With help from its new Open Series blueprint, KB reported a 26 percent increase in new home orders during the first quarter. It was the first year-over-year sales increase for the beleaguered builder in more than three years.

It appears the era of the McMansion is coming to an abrupt end, and with a vengeance at that.

At least Curt Schilling has the good (real estate) sense to lower, not raise, his asking price.

After watching his Medfield manse sit on the block for more than a year without landing a buyer, Schilling, who just announced his retirement from the Red Sox, is now seeking a none-too-shabby $5 million for his 11,000 square foot suburban palace, the Boston Herald reports.

That’s $3 million off the original listing price.

It’s also presents quite a contrast with the real estate antics of Schilling’s former Sox teammate Manny Ramirez.

I guess we just had to be the party poopers.

Both home and condo sales across the Bay State fell by double digits last month, the Massachusetts Association of Realtors reports.

Prices, once again, plunged as well.

The news comes just a day after national numbers were released showing a surprising uptick last month in homes sales across the country.

Overall, Massachusetts home and condo sales fell in February 11.4 and 16.4 percent respectively over the same period last year.

It’s hard to draw any big conclusions from the clash between a local market that is still stuck in the doldrums and a home sales nationally, which are finally showing signs of life.
Still, big drops in price have driven sales nationally, with the sale of dirt-cheap foreclosed homes and condos driving the February’s 5 percent-plus jump in sales.

Interest rates are below 5 percent! Run, run, run to your nearest open house! Buy, buy, buy!
Not so fast.

Just like the $8000 tax credit, lower mortgage interest rates do not change a non-buyer into a would-be buyer. Both the tax break and the low rates may change a struggling would-be buyer into a hopeful would-be buyer. For most buyers, the tax credit and this rate decrease are not the make-or-break point in their decision to buy.

Here’s how the rate decrease helps:
Suppose you buy a $400,000 home this spring. If you are borrowing 90 percent on it, your principal and interest at 4.75 percent is $1878. Last winter, the rate was about 5.25 percent; you would have paid $1988. In the summer of 2007, at the beginning of the decline, the rate peaked around 6.75 percent; your bill then would have been $2335, plus tax and insurance. Yes, that $450 savings is significant to your budget, but…

It’s probably too early to say the housing market is getting back on track.

But I’ll take any day Monday’s surprise announcement that home sales across the country jumped by more than 5 percent in February.

Of course, the rise in sales was accompanied by another big drop in price – 15.5 percent down to $165,400.

But that’s OK for now, for what is clearly shaping up is a massive clearance sale that could start clearing out the backlog of foreclosed homes.

Mortgage rates are plunging again.

In a matter of hours after the Fed Reserve announced plans to pump another $1 trillion into its campaign to lower mortgage rates and save the economy, the average rate on a 30-year mortgage had dipped below five percent once again.

Zillow.com claims rates on its mortgage marketplace fell from 5 percent to 4.68 percent in the hour after the Fed’s announcement.

The last time they were that low, of course, was back in January, on the heels of the last Fed push.

I count myself lucky. I’m about to convert the construction loan on my Natick fixer-upper into a permanent mortgage, so the timing of the rate drop can’t be better. (And, of course, I am waiting to see whether we really get the low rate amid some pretty nasty shifts in how banks are evaluating credit records, which increasingly seems to have abandoned all common sense.)

But the Fed’s moves are not aimed at people like me. Rather, this is a high-stakes bid to push would-be buyers, sitting around and waiting for even better deals to come around, off the sidelines and into the housing market.

Christians know about the apostle, Thomas. He would not accept that Jesus was resurrected when he was told of the miracle by fellow apostles. He needed to see Jesus for himself. It is blessed to believe without needing to see, but not all of us can. We are human.

The Gospels describe a very human way to make decisions about what is true. Some people need to see to believe in big-picture matters that are beyond our senses. For mere intellectual matters, like looking at the real estate economy, this is not such a bad thing. In this regard, I stick to Thomas-like doubt in statistics and projections.

I give you two views of the Boston economy.
The first, the facts from Forbes, Inc. Forbes.com notes that Boston has increased its unemployment rate by only 1 percent since October 2007. That makes us Number 3, nationally, with a 4.4 percent unemployment rate.
Forbes states:

Boston is another bright spot. The area's hospitals, research institutions and universities together drive the city's economy. They also provide a ready-made highly educated workforce, which draws a growing number of biotech, software and clean technology companies to the city.

It’s not often I want to eat my words. But this is one case where I’d be happy to, and with relish.

In a recent post, I talked about the unhappy relationship between a falling stock market, consumer confidence, and hopes for a robust spring sales market. Basically, with stocks in free fall, that wasn’t going to happen.

Of course, no sooner had my post gone up last week than the stock market began to rally. It’s anyone’s guess how long this spring thaw on Wall Street will last, but I’ll take it. Any good news at this point on the economy is bound to provide a boost of some sort to the battered housing market.

When does spring begin in real estate? I’ve been asking around. Most of the brokers I meet sound like Bill Belichick’s “it is what it is.” They say “it happens when it happens.” One broker said, “Definitely, March 1st...uh…unless it snows March 1st.”

On March 8th, my partner walked into an open house where the property was under agreement based on a bidding war that happened the night before.

On March 9th, I had my first buyer close who could take advantage of the Stimulus credit.

On March 10th, I spotted my first price increase upon relist (think Manny.)

On March 14th, I ran into my first bidding war finished before the open house.

It is spring in real estate… Like pornography, “I know it when I see it.”
As a buyer’s agent, what I like about spring is that there is more inventory. I am starting to see that. I like the better weather; I see some of that. I love the daylight during after-work hours. I am already taking advantage of that; I’m already showing later in the afternoon.

To answer the question posed last week: Spring comes in all markets, good and bad. As far as I am concerned, a spring full of bidding wars is a bad market.

Let’s just hope President Obama’s $275 billion plan to stabilize the housing market kicks in fast.

So far, the track record of these grand government interventions with eye-popping price tags has been spotty at best.

Just look at the latest RealtyTrac numbers, which point to a 30 percent, year-over-year increase in foreclosures across the country and a nearly 6 percent jump from just this January.

The increases come even amid a growing number of moratoriums on new foreclosures in various states, noted James J. Saccacio, chief executive officer of RealtyTrac, in a press statement.

I got an email on Wednesday. Tim asked a good question for the "Living Well" topic. He asks:

… I have a question that hopefully you can answer [at Boston.com/news/blogs/renow]. I am new to the home buying market and I want to know why similar sized homes cost so much more in the Massachusetts market compared to say Cincinnati, Nashville or anywhere in Texas to name a few? Am I that naive is it really that much better living here then other states?

The article I sited Wednesday answers this question. If you want to read it yourself, the discussion of how talent-attracting regions are economically robust begins on page two, paragraph two.

In short, Boston and other places like it are “brain Meccas.” For Boston, the reason cited is the colleges. We have a lot of middle class, wealthy, and/or smart young people who come here for their college education. They think fondly of this place and many try to stay. Some come back. Some college educated people from elsewhere come here based on the buzz of their friends who went to school here or for a job.

One of the more spectacular aspects of the housing crash has been the virtual implosion of the market for new homes.

Sales of new homes across the country plunged 10 percent in January to an annual pace of 309,000, the lowest level since 1963, according to figures just released by the Commerce Department.

Right alongside the dramatic drop-off in new home sales has been the downward spiral in new home construction.

That number fell to an annual pace of 466,000 last month, far, far below the million starts a year that you might see in an average year.

The fall-off in the new home market, while understandable given the severe recession, is an especially bad portent for an already housing-constrained state like Massachusetts.

Renters, take note, you may be in the right place for our economic future.

In The Atlantic, economist Richard Florida takes a long view of the world economy. He says that long depressions are opportunities for the economy to reset itself. During these hard times, large numbers of people change their economic lives, taking the country into a new economic era.

In the so-called “Long Depression” of 1873 to 1896, America changed from a strongly agricultural economy to one where many made their livings in large industrial cities. In America and elsewhere, there was huge growth in manufacture when the recovery took hold.

The “Great Depression” of 1929-1941 saw the growth of the American suburb in the recovery.

There are some pretty strong feelings about President Obama’s $275 billion to stabilize the housing market. Very strong feelings.

The political lightening rod in this package is plans to spend tens of billions to support mortgage modifications in a bid to bail out millions of struggling homeowners.

It comes atop hundreds of billions already spent or committed to prop up fat cat financial institutions, some of which have then promptly taken the money to Vegas or splurged on bonuses for top management.

But that has left a lot people in the middle - who played by the rules but are now effectively subsidizing, through their tax dollars, mistakes at either end of the economic ladder, feeling increasingly resentful. The Globe’s Robert Gavin and Jennifer B. McKim chronicle this mood in “Bailout Lament: What about me?”

The story points to people like Brian Carpenter, a tech worker, who bought a house in Woburn nearly 30 years ago and raised three children. He’s always paid his mortgage, even if that meant economizing in other areas, from driving old cars to brown-bagging his lunch.

But the most he’ll get out of the $787 billion stimulus bill is a $13 a week tax cut aimed at middle class workers.

The good news is that the inventory of unsold homes is starting to fall pretty rapidly. Unsold listings in the greater Boston area plunged 25 percent during the last three months, according to local real estate tracker HouseSavvy.

But here’s the bad news: After you factor in the even more dramatic drop in sales activity – 55 percent – it will now take more than 11 months to clear out the homes that remain. Just a few months ago, when sales were actually happening at a recognizable pace, that number stood at just over 8 months.

The HouseSavvy survey speaks to an important trend, though, one that is dashing expectations of some would-be buyers that the current market would provide them with a plethora of high-quality homes at bargain basement prices.

Sadly for those who have saved up for such a rainy day, it’s not working out that way, at least not yet. Few if any owners are putting their homes on the market unless they have to, which means a dearth of decent properties to choose from for potential buyers.

So real estate speculators are bad, right?

I mean that’s what our fearless new leader tells us. President Obama got in a few jabs against all the real estate “speculators’’ during his rollout yesterday of his $75 billion plan to rescue troubled homeowners.

And I have no doubt that a legion of such small-time, and not so small time “investors’’ share a good part of the blame for that gigantic mountain of foreclosures now crushing the nation’s economy.

But even as our new president, and for that matter every other politician, rails about the Main Street version of reckless and greedy business behavior, Fannie Mae, all but now an arm of the federal government, is opening up its vaults to “high-credit quality, bona fide investors.’’

Fannie Mae will now provide financing for "experienced investors" seeking to buy up to ten single-family homes or condos. Or is it speculators? Anyway that’s more than double the long-standing cap of four homes.

When hard times hit the real estate market, apparently the rich towns just keep getting richer – and more attractive to buyers.

In commercial real estate they call it the “flight to quality.’’

That’s when corporate tenants, in a weakening office market, flock to the trophy towers in town. Rents are suddenly more affordable in these top addresses, plus they are relatively safe bets in uncertain times.

A similar phenomenon appears to be taking shape in the suburban real estate market, according to a story in the Homes section of Sunday’s Globe.

Buyers who once flocked to Wayland or Bolton during the boom because they couldn’t buy in Weston or Carlisle are now finding out they can get afford real thing. Or at the least, it’s more affordable.

The downtown condo market is certainly down, but it’s far from being out.

That’s the sense I came away with after working last week on a story for the Globe on luxury condo sales in Boston.

A new report by PrimeTime Communities, a real estate research and marketing firm, found that, on average, new condo developments in Boston are averaging about one sale per month.

That’s definitely down from the boom times, when many of these projects sold out before they even opened. At the least, trendy new luxury condo and loft complexes were averaging three to four sales a month, not one.

Yet while sales activity is down dramatically, it has hardly fallen off the map altogether. That’s in contrast to the suburbs, where the report found most new condo projects were barely selling a unit every other month.

My house may be down in value now. But buddy, just you wait until June.

That’s one way to read the latest Zillow.com survey, which found a whopping 70 percent of homeowners surveyed across the U.S. believe their castles will either rise in price or at least hold their value over the next six months.

Only 30 percent think their home’s value will go down.

It’s consistent with other surveys that have found similar delusions among many homeowners, such as the belief your house is increasing in value even as the rest of the market is declining.

This bullishness about the real estate market’s near-term prospects is admirable.

But it seems pretty clear we are stuck at the bottom of a pretty nasty ditch – one that’s going take more than six months to crawl out of.

So here’s what my inquiring mind wants to know: Who is buying all those foreclosed homes and condos out there?

That’s one of the questions I had after reading through the Massachusetts Association of Realtors annual survey of home buyers and sellers.

While foreclosures now make up a significant chunk of what’s out there – hundreds of homes are getting auctioned off at a time now – only 3 percent of those surveyed had actually bought a distressed property.

Another 35 percent of buyers surveyed had considered buying a foreclosed property, but could not find the right home or found the purchase process to be too cumbersome.

One possible conclusion is that the real estate speculators who made a bundle on subprime-driven flips and sales during the boom are back at work again buying up foreclosed properties at dirt cheap prices.

This is not a cheerleader piece. I don’t do rickety-rack. My job on the blog is to tell the theorists and spectators what is actually going on out there. My beat is eastern Massachusetts near Boston.

If you have been going to open houses this month, you may have seen houses that have sold quickly. There aren’t many of them. There aren’t many new listings for sale, either. The tales of multiple offers are starting to float around broker circles. They are true, but they are few. This is not unusual for the winter. Sellers who are trading up or trading down benefit from getting their sales nailed down before they go house-hunting in the spring inventory.

This winter, I had two households of clients whose rejected offers came back to life. Over a month after the first offer was rejected, I got a call. The offer process began again. In both cases, my buyers are now under agreement. In one case, an offer ahead of them fell through; in the other case, the sellers regretted rejecting the offer. In both cases, the buyers got a good price for the house in relation to market value.

How can you separate the fast-sellers from the ones that will go down in price?

It used to be fun reading through the real estate listings in the back of Banker & Tradesman, seeing who blew $10 million on some downtown condo and who lost their shirt in a foreclosure. (In the interest of full disclosure, I write a weekly column for the paper.)

But there’s one thing that, until the last several months, you never saw: home and condos selling for less than what they were bought for.

Now, pick up the paper, and you can’t avoid it. A casual glance of this week’s records reveals a Marlborough Street condo that just sold for $425,000, having fetched $427,000 two years ago, and a Charlestown condo that sold for $424,158 at the peak of the boom, now changing hands for $385,000.

All of which brings me to Zillow.com’s fourth quarter report, just out today.

One step forward and two back.

That’s my take on another spate of gloomy housing reports, which come on the heel of the surprising rise in sales, both locally and across the country, in December.

New home sales have plunged to record lows, according to a new report out by the Commerce Department.

Sales dropped to an annualized pace of 331,000, or lower than all 70 forecasts in a recent Bloomberg survey, the news service reports. The entire Northeast accounted for just 2,000 new home sales last month, out of a paltry national total of 23,000.

Rents are down across America. Boston is tenth on the list for rent-dropping towns. Business Week reports that rental rates are down, especially in luxury, doorman buildings. Why? Because people are down-sizing to scale down their housing costs.

I have not seen any statistics on “regular” rental rates going down. Have you? Around here, the peak rental period is in the summer, when students and academic employees flock to the area. Maybe we will see the sea change next summer. I wonder if this will be good news for Jason. Can Charles renegotiate for a better monthly rent? How about LynnLS and all you other renters, are you anticipating an opportunity next rental cycle?

Not long ago, the idea of the real estate industry lobbying for a boost from the federal government to kick off the spring sales market would have seemed laughable.

There they go again, those always-a-good-time-to-buy real estate agents, I probably would have chuckled.

But in this crazy, upside down economy we are all stuck in right now, that’s exactly what’s happening now.

And I don’t know about anybody else, but I’m not laughing now.

Lawrence Yun, the chief economist of the National Association of Realtors is urging the new Obama Administration and Congress to act fast and get those stimulus dollars – all $825 billion of them - onto the street.

That’s right, in order to boost the spring sales market.

If you a buyer who is thinking of spending your Sunday afternoons at open houses, what should you expect in February?
I expect you will see mostly leftovers. But don’t be discouraged. The sellers will begin to market for the spring season before you know it. In the meantime, there will be a few new properties showing up. Some new listings will sell quickly. Don’t take the bait unless the property is unique, I mean really unique. There are more listings coming, so hold onto your wallet.

When does the spring market start?

I get asked that question almost every day, starting around January 15th. It takes a bit of crystal-ball gazing to know when sellers plan to put their homes on the market. I am guessing the behavior of people I have never met. As a general trend, these factors affect the start of the spring market:

Weather: when the snow is still on the ground, sellers hesitate.

So have prices finally fallen far enough to bring out the bargain hunters?

That’s one of my questions after seeing the spate of reports on the unexpected bounce last month in home sales, both locally and across the country.

Single-family home sales in Massachusetts rose 4.7 percent in December compared to the year before, the Warren Group reports in numbers released today. Condo sales plunged 22 percent, however.

All told, the median home sale price in the state is now $305,000, down $40,000, or 11.6 percent, from 2007.

That certainly can't hurt when it comes to moving properties.

But with the market in California, Florida and other boom-to-bust states flooded with cheap foreclosures, there’s a lot of bargain hunting going in other parts of the country as well.

Still, while the National Association of Realtors’ report that existing home sales jumped more than 6 percent from November to December helped drive stocks higher, there’s danger in getting too excited here.

If you went to open houses this weekend, you are likely to be disappointed. This is the time of year when would-be buyers start going to open houses to get a jump on the spring market. There are few choices out there. It is sort of like trying to buy a pair of winter boots right now; you may get lucky and find the right thing, but you are more likely to find a boot you like in the wrong size or the wrong boot in your size.

Because buyers are picking through winter leftovers, newly listed, well priced homes will attract attention. When I poke through MLS in my towns,* I find that 12 properties are under agreement in less than ten days, since January 1. (I checked them all for relisting!) That’s not impressive, given the 2458 homes still for sale. When I look at what is marked as “active, but collecting backup offers,” I get one more. Still not very impressive. My advice to buyers: just say “no” to bidding wars! They happen in the winter, but not often this year.

I agree with readers who are unhappy with the assumption that any home worth living in costs more than $460,000. That is insulting to large numbers of homeowners and renters who live outside the toney suburbs. The jumbo limit is just not a limit that matters to large numbers of homeowners.

The jumbo limit plus a 10 percent down payment comes to about $460,000. Anyone who thinks that all homes selling for less than $460,000 are dumps or in slums is just wrong. Doing a little looking in the MLS, I see that 4969 homes sold in Massachusetts in the past year that cost $460,000 or less. I looked only at homes that had three or more bedrooms, six or more rooms, and one and a half or more bathrooms. That’s not counting condos, just single family homes. When I bring the limit down to $300,000, there are still 2945 of them. If I used Warren Group data, I could add more.

I want to show the readers of this blog that not everyone wants and needs a nearly half-million-dollar house. Those who bought for $300,000 or less have a story to tell. Heck, those who bought for under $460,000 do, too, if they need a big house. You have the right to crow. You made a good decision and it has worked out for you.

This is part two of the answer to L., who wants to understand buying and owning in a downward moving market.

In a “normal” real estate market, the price of housing goes up at a fairly steady clip. Some say 3-4 percent; some say 4-5 percent. The conventional advice is to stay in a property at least 3-5 years in order to benefit from the appreciation. This way, the appreciation on the home covers the cost of borrowing, moving and nesting, and those dreaded broker fees.

When we have conditions where the market is going up too fast, it is followed by a sharp decline. We experienced too steep a climb starting around 1995 or 1996 that petered out in the summer of 2006. (There were still some markets going up through the spring of 2008, but they are exceptions.)

Some readers on this blog have studied the market and have strong ideas of what will happen. Many readers do not know how markets change. This entry is for people who want to understand the dynamics of buying, selling and owning in a recession.

I got an email from L., who asked this:

In the most recent article, you ask, on the subject of people not staying in their houses for the full term of the mortgage:

“How long do you expect to stay in your home? If it is for less than ten years, how do you expect to get your equity out of your current home?”

What do you mean? I'm not really sure of the question you're asking, but as one of these people I would like to understand it better.

In the last real estate recession, it took about four to eight years to get back to the peak, and then surpass it. Some places took less time, some took more time. Some claim that their town never went down; it just failed to go up.

The peak was around 1989. Prices were back to 1989 levels by 1993 in some places where I worked. In the places I worked most, they were back to peak by 1996 or 1997.

Here’s another bad sign of the times.

The number of people losing their homes to foreclosure across the country is now outstripping the number of new homes being built.

More than 860,000 homes were foreclosed on last year, a new report by RealtyTrac finds. Overall, banks and other lenders sent out more than 3 million foreclosure notices last year, signaling the start of the foreclosure process.

That means more than 200,000 homes last year were seized by banks and other lenders than were built by developers.

All told, builders were on track, as of last November, to build just 640,000 new homes and condos in 2008. That’s the lowest amount in decades and it’s far below the watershed 1 million mark. In past downturns, when annual housing starts fell below a million, they quickly rebounded.

Not so this time around.

Remember John Dough? You met him on November 6. He bought a bank-owned property with the intention of finishing the renovation and selling it for profit. You heard about his private financing on November 18th. Now, John has a loan, he has a deed, he has a budget. He's picking up his hammer and getting to work.Here’s John in his own words:

Getting to Closing in One Piece: It’s been awhile since I last commented on our progress so here is an update. After we secured our financing we had about three weeks until closing. It was pretty uneventful. Title was clear, taxes were owed, and the water/sewer bill had to be paid. The bank owning the unit agreed to pay the taxes, but would only pay a 1/3 of the water/sewer. So we had to pay the balance, which wasn’t much ($400 or so) and we also had to insure the property which meant that we’d be paying for the share of the other condos in the building that were bank owned. That cost was about $1200 for a half year master insurance policy. We plan to recoup 2/3 of that cost when the banks try to sell their units. With all that going on, we closed about a week later than expected but we weren’t subject to the usual fees that banks invoke when you don’t close on time. We now owned the condo.

Well if you had any doubts that it is going to take a very long time to dig out the housing mess we are in, check out this report.

PMI Mortgage Insurance, in its latest market report, is predicting an “elevated’’ or “high’’ probability that prices will be lower in nearly half the nation’s 50 largest housing markets by the fall of 2010.

I guess we can forget about all those debates about whether the market will turn around in 2009. Ditto for the National Association of Realtors' prediction of a modest rebound in sales and prices this year.

Nationally, home prices are already down 23 percent from their peak in July 2006.

Yesterday, I told N. that she needed an appraisal. Why didn’t I say she should get a Comparative Market Analysis from a real estate agent? Because N. will be working with a lender. The value figure she needs is the amount that a lender will accept for collateral.

An appraiser uses the standards that lenders require to establish the value of property used as collateral. They also valuate in legal matters such as divorce and estate sales. That’s their job.

Real estate agents establish fair market value in order to help their clients sell and buy homes. Potential listing agents do a Comparative Market Analysis as data to establish fair market value. This is only one piece of the marketing plan to establish the highest price that a buyer may pay for the property. Buyer’s agents work a lot like potential listing agents. Their goal is to establish a fair market value as part of a negotiation plan. That information is one part of the advice on how to make an offer that is the lowest possible one that a seller would accept.

Speculators helped drive up prices during the real estate bubble, snapping up everything from pricey downtown condos to neighborhood triple-deckers and rapidly reselling them for big profits.

Well these down-and-dirty real estate investors are back at work, snapping up foreclosed units at rock-bottom prices. And now a pair of the nation’s top housing experts is warning this latest speculative frenzy could derail a housing recovery, Bloomberg reports.

On the surface, it looks like good news. Everyone from small time builders to big investors starts buying up distressed property, taking off the market the excess supply of foreclosed homes that has been dragging down prices.

But only if it were to work that way. Instead, Joseph Stiglitz, the Nobel laureate economist from Columbia University, and Robert Shiller of Yale, warn that such investors will sit on their newly bought bargains, only to throw them back on the market when prices rise, bogging the market back down again.

Next up in the federal bailout line: Realtors.

The latest batch of home sales numbers looks pretty grim. Pending sales in November fell to their lowest level on record, the National Association of Realtors reported yesterday.

The anemic sales are just the latest sign that a whole bunch of would-be buyers suddenly got cold feet this fall after the stock market went crazy and the global financial system appeared on the brink of a meltdown.

The index tracks contracts to purchase homes, deals in the pipeline that have yet to officially close.The Northeast and the Midwest had the worst numbers.

But in a switch, the powerful real estate trade group is not downplaying the bad news this time.
Instead, NAR and other industry boosters are pointing to the depressing numbers to call for federal action to boost the sinking home sales and prices.

When a smart guy like Karl Case can’t figure out this market, then maybe we really are in trouble.

I recently interviewed the Wellesley College economist and housing guru for a story that ran in Sunday’s Globe on what’s ahead for home prices and sales in 2009.

And Case, very uncharacteristically, hedged his bets. The guy who back in 2005 was warning the housing bubble was bound to burst is shying away from any bold predictions this time around.

The latest numbers on home prices, the 20-city S&P Case-Shiller index, were nothing short of brutal.

Home prices posted a painful 18 percent, year-over-year decline in October, according to the survey of major metro real estate markets stretching from Boston to San Francisco.

Of the cities tallied, 14 set new price decline records. And just to cheer you up, it has now been 27 straight months that the widely watched housing price index has gone down, not up.

The great Massachusetts housing debate is back.

That’s one way to look at the Massachusetts Housing Partnership’s just released study that found other key cold weather cities fared better both in building housing and creating jobs over the past decade than Boston.

The study, detailed in Tuesday’s Globe, makes the link between housing production and economic growth.

Minneapolis, Indianapolis and Columbus all added jobs from 2000-2006, while Boston’s employment base shrank during the same time period. And these Midwest cities all built new homes and condos at roughly twice the pace as the Boston area.

In my The Best of 2007, I was pleased to see falling prices, the death of subprime lending and decline in bidding wars.

In 2008, I am pleased to see continued falling prices and the further tightening of lending rules. However, there was no let-up in bidding wars until very late in the year, in my area.

Yes, the changing mortgage availablity has effectively stopped people who should not buy. The price drops have helped those who are trying to buy and can. But, in my area (and others) the low availability of homes in good condition continues to set the stage for pockets of seller’s market activity and bidding wars.

If you think home sales in Massachusetts are hurting, take a look at California.

However, while it’s easy to dismiss the Golden State as a real estate basket case right now, it may hold some lessons for the rest of the country.

Prices, to be sure, are plunging. But sales are rising. And that, for starters, is what may be needed to jolt an otherwise dead market and bring it back to life.

Ok, here’s more evidence that hopes for a housing market recovery are on hold.

Single-family home and condo sales posted year-over-year declines of 22 percent and 27 percent respectively this November, the Massachusetts Association of Realtors reports.

There were some signs over the summer that sales were starting to rise, even as prices were continuing to plunge. Given the lag time it takes to close a home sale, those rising sales were reflected in the September and October home sales reports.

But the November numbers are the first clear indication of the impact the global financial and economic crisis that erupted this fall is having on home sales in Massachusetts.

And it doesn’t look good

There’s the down in the dumps real estate market we all love to complain about. Then there’s Back Bay’s Mandarin Oriental.

And the two apparently don’t have much in common right now.

Jenifer B. McKim, in yesterday’s Globe, reports that 10 of the posh condo project 49 units are on the market, barely three months after the Mandarin opened.

A sign of distress amid hard times? Hey, even the superrich have their share of troubles now, right? Well, not really. The owners may be looking to move on, but don’t count on a bargain.

That’s my question after reading through the comments on my recent post, “No fair fight for homeowners.’’

I had sympathized with home sellers competing with a flood of foreclosed properties that, by all accounts, are helping drag down prices across the board.

But there are some strong feelings out there that the real estate market, especially in Massachusetts, needs to see even steeper declines in home prices.

As foreclosures go, so goes the rest of real estate market.

So any signs that banks may be finally starting to slow down with the until now frenetic pace of home auctions is good news.

A new RealtyTrac report for November shows foreclosures down 7 percent from October, though still up nearly 30 percent from a year ago.

Don’t bank on a real estate rebound next year, despite what the National Association of Realtors says.

The real estate trade group came out yesterday with a forecast of what the final home sales numbers will be for 2008, as well as some projections for 2009.

It’s hard to dress up the 2008 numbers, which look brutal. NAR is estimating a 9.3 percent drop in the price of existing homes and a 7.8 fall in new home prices. Sales are off even more dramatically, by 12.3 and 37.3 percent respectively.

Fair enough. I appreciate relative honesty. But I don’t really get how NAR jumps from these dire numbers to predictions of a turnaround next year, however modest. It’s not like a magic spell will be cast over the real estate market on Jan. 1

The tougher times gets, the more optimistic some people seem to be getting about the real estate market.

I recently wrote about a Zillow.com survey that found 61 percent of homeowners believe the value of their castles had either remained level or risen over the past six months.

Hey, it’s not my house that’s the stinker, it’s my neighbor’s.

Yet there’s a difference between such unfounded and even deluded confidence and well-grounded optimism in the long-term value of real estate.

And there’s new evidence out there that despite the worst real estate market since the dreaded 1930s, most people have not lost their fundamental belief that a home is a good long-term investment.

The first wave of foreclosures came after the implosion of the wild-and-crazy subprime mortgage industry.

Now, with layoffs mounting, we may soon start seeing the second wave as the burgeoning ranks of the unemployed, from factory workers to executives, struggle to make their mortgage payments

Financial services firms, the economic engine of the Hub, are now slashing their payrolls, as the Globe reported yesterday. And the national recession, which just a few months ago had been felt more lightly locally, is now hitting home here.

Get ready for more foreclosures in the suburbs, including in some of the tonier towns. But the impact goes much deeper than that.

When I wrote about the freeze on foreclosures, I got this question:

Rona - as a new homebuyer with a few defaults on my credit report can I go to the bank and get a new "something I can pay for" for 40 years?

As a new homebuyer? I wondered, how new?

A little recent history:

Subprime mortgages were restricted about the time I started on this blog, summer 2007.

It was (and is) still possible to hang yourselves without being in a subprime mortgage. FNMA would allow 50% for mortgage debt in October 2007. Now, it’s hard to borrow with small down payments or above the jumbo limit. But debt is there for the accepting if you have the money to put down with your real estate purchase.

Today (!) no doc loans are still being advertised.

So far the real estate downturn has hammered poor urban neighborhoods and middle class towns.

But will the tide of distress reach the golden shores of Weston, Wellesley and Brookline before it finally recedes?

It’s a fair question and one that has sparked a lively debate on the blog.

In one camp are the “location, location, location’’ devotees who appear convinced that no spate of foreclosure auctions will ever taint a Wellesley or Weston.

It’s a tough time to be in real estate, especially the business of selling homes.

But here’s one thing real estate folks can give thanks for. While the housing market is a mess, the Joe the Plumbers of the world are blaming the bankers, not their local real estate agents.

Bankers now find themselves one of the public’s favorite targets after the meltdown on Wall Street, according to a new Gallup poll. Nor can I imagine the sudden clampdown on credit – and the mountain of rejection letters sent out to would-be borrowers of car and home loans - is helping the industry’s popularity either.

I got my knuckles wrapped a bit over yesterday’s blog when I called the recent spate of real estate news depressing.

It’s what makes blogging fun.

However, while the comments were insightful, some missed the point. If falling prices are bringing out the bargain hunters, all the better to get the market on track. But the current round of real estate numbers may say more about a nascent recovery that may have been taking shape over the summer than what has actually transpired after the global financial markets went into meltdown mode in September.

Maybe it’s just me, but I suspect not. But how is it that every other day we have some federal agency or state governor announcing a new foreclosure plan, and the number of people losing their homes just keeps soaring?

What gives?

Altos Research and Real IQ provided this list to Inman News. At the risk of more “same old, same old,” this data matches what I am seeing in the greater Boston marketplace: modest declines in price and more significant declines in inventory.

I continue to run into sellers who are not going to succeed in selling their overpriced homes. Some sit on the market, some are being withdrawn.

I continue to see other properties sell in less than five days.

I have seen a short seller who painted himself into a corner by dragging his feet long enough for my buyer to give up and buy something else. (It was the seller, not his lender, who caused the delays.)

I called to make a showing appointment for an under-priced but unremarkable home. I got an amazing voicemail in return from the listing agent. He sounded like he was doing me a favor by interrupting his busy day to call me. This is what he said, I paraphrase:

The very next day – I am not making this up! -- Another client wrote this:

BTW, I'm not sure I understand this business of tenants not letting prospective buyers into the house. If I had a house listed with an agent that couldn't get it shown, well, what's the point of putting it up for sale? (Or, less kindly, what's the point of using that particular agent?) Don't owners have clauses in their rental agreements requiring tenants to allow the house to be shown, given adequate notice? I don't get it...I know that if I was a tenant, I wouldn't be happy at the prospect of a new owner giving me notice to leave, but I'd let that person in since it's part of my rental agreement...and, I'd probably be seriously looking for a new apartment anyway...

And I answered:

About tenants. No, there isn’t a clause that says that they must allow the house to be shown. Tenants have the right of "quiet enjoyment" which means they have the say about who comes in and when. The sellers who do not empty a house for sale want to have their cake (sale) and eat it (rental income), too. If you have a house with problem tenants, they probably don't have the cash ahead to move (an extra month's rent can be hard for some people.)

So today’s sale and rental issue is about the people who rent a home while it is for sale.

An email from one of my clients said this:

Hello, I had a question... today I noticed the same house is both for sale and for rent... does this often happen?

[Attached here was a link to a rental notice on Trulia for about $2000 a month. This house is on my client’s MLS list for sale around $400,000.]

It seems like the way the system works, sellers agents would be very reluctant to see a house offered for rent. I was pleased to see the ratio of price-to-rent was relatively low. I'm curious what, if anything, this means about the state of the Market, as they say.

I answered:

Did you notice that the same agent is doing the rental and the sale? That means he will sell it now, or sell it later. So his disincentive is minimal.

Renting homes that don’t sell is happening more and more in the unstable market. It means that sellers are insecure enough to be willing to rent a place until next spring so they don't need to sell it during the winter slump. Also, he won’t have to heat an empty house all winter.

While at an empty open house, another broker and I got to talking.
She told me this: One of her buyers had dropped out because that buyer had lost $80,000 from her investment portfolio. The broker rolled her eyes and said that was $80,000 more than she’s ever had in investments. I am hearing a lot about investments flattened by the economic crisis. I also hear a lot of people comparing what they have and what they lost to what someone else had and lost.

And that brings me to today’s real estate discussion: poverty and housing

JChristian commented on this entry about bidding wars.

... these bidding wars are definitely interesting to hear about against the backdrop of the overall slide. I think you gave the right advice, even if it means having to cut budding emotional attachments to prospective homes several times before finally managing to buy one. If I walk into the store looking to buy Cheerios, and I reach for a box, only to have several other people appear grabbing at that box, saying "that's the one I wanted!" and pulling out a dollar more is probably not a good idea.

This is a silly example, since Cheerios are a “perfect” commodity (meaning there are lots of boxes that are all the same.) However, boxes of Cheerios (or some other cereal – I’m not picking on that brand) are not all the same. Food packaging has changed; the volume is decreasing while the price stays the same. So, you may be getting less than you got six months ago.

Today, I found out about a promotion that is different than anything I have ever seen before. I’ve seen “Big Move” advertising blitzes, special open house weekends (where every listing is open), and give-aways of televisions, vacations, and even a car. But this is widespread and different. Coldwell Banker Residential Brokers is holding a sale. They are convincing their sellers to lower their prices for ten days, starting this Friday, October 10th. Reuters covered it today.

This is an encore (a disingenuous name for a repeat.)
This entry was posted August 22, 2007. Back then, the comments feature wasn't working and not many people knew we were writing here. Much of it is even more true today than it was 14 months ago:

Whenever a house sells in my neighborhood, my neighbors ask me, "how much?" Then one will say something like this: "If he got $325,000 then my house is worth $390,000..."Invariably, my neighbor has inflated his home's value by $20-30,000.

Why is this? According to Daniel Gilbert in Stumbling on Happiness we agree with information that reinforces what we already believe. Therefore, the single fact of one house sale allows my neighbor to feel confident about his (wrong) price.

The S&P/Case-Shiller Home Price Index for July was released this morning and it shows that the downward trend in prices is continuing nationally. Many cities tracked by the index are still seeing double-digit declines in the sale prices of existing single-family homes.

Both the 10-city and 20-city composite indexes reached new record annual declines, 17.5% and 16.3%, respectively, according to Standard & Poor’s. The 10-city index –- which is a value-weighted average of the 10 original metro areas followed by Case-Shiller, including Boston –- has recorded declines every month since October 2007.

Boston is still among the stronger markets on the list, having been one of five cities to record a positive return in home prices for three months or more. The other “strong performers” are Atlanta, Dallas, Denver, and Minneapolis.

From June to July, Boston recorded a 0.2% increase in sale prices. It’s not much of an increase, but it’s better than Las Vegas, which was the weakest market for the month and recorded a 2.8% decline.

However, every city tracked by the Case-Shiller index has negative annual returns.

When looking at the one-year change in home prices, the weakest market is again Vegas, which posted a 29.9% decline in home prices in July when compared with July 2007.

On the other end of the scale, Charlotte was the “top” performer for the period, recording a decline in sale prices of only 1.8%. The list of the five cities that had the best performance for the year-over-year period is rounded out by Dallas (2.5% decline), Denver (4.7% decline), Boston (5.4% decline), and Portland (6.6% decline).

What does this all mean overall? Here’s what David M. Blitzer, chairman of the index committee at Standard & Poor’s, said in today’s news release: “While some cities did show some marginal improvement over last month’s data, there is still very little evidence of any particular region experiencing an absolute turnaround.”

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From my email last week:

At 10:35 AM 9/25/2008, you wrote:

Hi Rona,

.... My wife and two daughters and I are anxious to buy a home in ________ we love it: its close to work (I’m in _____[the next town]), good schools, and the community is terrific.

The problem is that we feel like there is basically nothing in ________ for us. We do have $150K to put down on a house, but with only my salary to work from ($60K/year) we just cant handle a big mortgage payment. ....
Are we being unrealistic in thinking that the market in ________ will ever come down to our level?

I told this reader to keep renting.

****

This email put a great big spotlight on the question of single-income families. How do they make it in Massachusetts?

I got soaked today, literally. Tuesday, I wrote about Walk/Ride day. Well, I am not on bicycle, but I hoofed it at lunch to run my errands...The weather is not the only unpredictable thing these days.

It is hard to know what is going to happen economically over the next few years. We are on the eve of a national election, our banking system is in chaos, and the state tax structure is up for ballot question. This week has been unrelenting: bad news, indecision, confusion...and my phone ringing with buyers who want to buy...huh?

The uncertainty affects people in many ways, but what I see most often with prospective buyers is one of these two reactions:

1. Burrow into a nest (home) and weather the storm as best you can.
2. Freeze, stay where you are, and weather the storm as best you can. (Some of these buyers come back years later, when they see better opportunities.)

For those interested in data, here’s another look at the real estate numbers from August, according to the Warren Group, a real estate data firm that tracks sales of all properties using records at the state’s registries of deeds.

In the first eight months of 2008, all but one of the 14 counties in Massachusetts have posted double-digit declines in sales of single-family residences. Sales in Barnstable County, which encompasses Cape Cod, declined only 2.5 percent when compared with the same period in 2007. It likely has fared better, relatively speaking, because it’s an attractive market for second-home owners.

During the same time, only one county saw an increase in condo sales. Franklin County in Western Mass. posted a nearly 3 percent increase. The rest saw double-digit sales declines. For the state overall, condo sales from January through August declined just over 25 percent when compared with the same eight months in 2007.

Meanwhile, in the same period the median sales price for the state slid about 9 percent. The median price is $318,000 -- meaning half the sales were for properties valued under $318k and the other half were valued at more than that.

Well, data released yesterday on August sales in Massachusetts made me grateful that I’m not a real estate agent working on commission.

The Warren Group, which publishes Banker & Tradesman, reported single-family home sales declined nearly 15 percent when compared with August 2007. For the first eight months of the year, sales are down nearly 17 percent and the median sale price is down about 9 percent. Meanwhile, the Massachusetts Association of Realtors said the homes that were sold through the state’s Multiple Listings Services spent an average of 130 days on the market before being sold. That’s up from 127 in August 2007.

In Globe reporter Jenifer McKim’s story today on the August numbers, Wellesley College economics professor Karl Case says he’s tossed his latest forecast for a possible housing recovery in early 2009. It’s a hard call to make with Congress and the Bush administration trying to pull together a $700 billion bailout bill for several giant Wall Street institutions.

“An enormous question is how far will prices fall before they quit,” Case told McKim. “I don’t have any confidence in any forecast I’ve seen. There’s so much uncertainty it is hard to be specific because we don’t know the answers.”

How about you, do you think there’s even a remote chance sales may begin to rise in 2009 – depending on the bailout and election outcomes? What about prices, how much further do you think they could fall in Massachusetts?

And what about your own housing situation, does the uncertainty have you rethinking plans to buy, or trying to figure out how to delay selling? I’d be interested to hear your experiences. (Jenifer McKim would also be glad to hear from you too. She’s working on a story on that topic, and she can be reached at jmckim@globe.com.)

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Three months ago I first heard about Walk/Ride Friday. This month, I am ready for it. Walk/Ride Days occur on the last Friday of every month - September 26th this month. On these days people everywhere are invited to go, and wear green! It is an initiative of Green Streets. Their vision is to create a monthly city-wide party, which celebrates alternative transportation, gives people an opportunity to make community connections, and promotes a festive local atmosphere. So far, there's a handful of businesses helping out in Boston, Somerville, Cambridge, and Medford. But this is a project that is just beginning to take hold.

The weather has changed in real estate again. We are in the autumn market. All of a sudden, there are more homes for sale, and more new choices for my buyers. I'm happy with what I have seen this weekend.

Why the change? It happens every year around this time. The autumn market is sort of like a mini-spring market. Buyers generally want to move sometime other than the winter. Most want to move in time to start the school year in a new place; thus we have the spring market. Then, around late July, buyers and sellers get bored with real estate. They want to go on vacation without thinking about houses; thus we have the summer doldrums. Now vacations are over. People are thinking about buying and selling before the winter sets in. Sometime between Veteran’s Day and Thanksgiving, it will probably slow down again. Sales volume is down this year, but the seasonal pattern remains.

Yesterday’s post about down payments generated a lot of comments from people frustrated by Massachusetts’s pricey real estate market. With asking prices still high in the Boston area and other parts of the state, it’s harder to come up with an adequate down payment, never mind a 20% down payment.

Unfortunately I don’t have any news to comfort folks today. Instead, I have more fodder for arguments the area needs a reality check on real estate prices.

According to Coldwell Banker’s home price comparison index, released yesterday, the list of the country’s most expensive housing markets is dominated by California. However, Boston cracked the top 10.

I get asked regularly about how deep the discount for short sale and foreclosure homes are in my area. My answer is “barely deep enough to be worth it.” When I work with buyers of this kind of property, I prepare them for a long wait, more aggravation, more risk...and some financial reward.

Only undertake a short sale if you have time, flexibility, and risk tolerance. Some things that I regularly see:

1. Slow communication with the investor’s office, which must approve all contracts.
2. Generally poorer condition of the property.

Boston and Denver were the best-performing markets on the Case-Shiller Home Price Index for June. Now, that doesn’t mean we’ve seen an overnight turnaround, it just once again means that among the suffering, the Boston region is suffering slightly less.

Of the single-family homes that were sold in June, there was a 1.2% gain in prices in Boston, and a 1.5% gain in Denver. That is the third consecutive month of positive returns in both markets, according to the folks at Standard & Poor’s who issued the latest Case-Shiller report yesterday. (Both Charlotte and Dallas have posted four months of gains.) The index tracks only properties that have been previously sold and compares current sale prices to past prices.

Nationally, there was a 14.2% decline in prices in the first quarter, and Case-Shiller’s 10-city and 20-city composite indices both hit record declines, 17% and 15.9%, respectively.

With real estate sales and property values sliding all across the country, some homeowners are at risk of “being underwater on their mortgages,” or owing more on their home than it is currently worth.

Nearly one-third of the country’s homeowners may be in that predicament now, according to Zillow.com’s second quarter Real Estate Market Report, which is being released today.

Nationwide, 29.1% of homeowners who purchased their homes since January 2003 now have negative equity, the online real estate data company reports. The highest rates of negative equity were found in homes purchased in 2006, at the top of the market in many areas. (In Stockton, Calif., 95% of homeowners who got into that overheated market in 2006 are now underwater, according to Zillow.)

Last week, my nephew Nate stayed with us. Nate is 21, a college graduate in mathematics, with a minor in political science from UConn. He’s moving to Boston. He began job hunting and the neighborhood research toward finding an apartment to share with other recent grads.

The Boston Globe just published two articles about young adult housing. One discussed how recent graduates should not jump into buying a condo or starter home.

The second Boston Globe article reports that higher number of juniors and seniors are choosing dormitory housing because of increased costs.

The Case-Shiller Home Price Index for May was released this morning, and it looks like another case of the Boston market outperforming those in other major cities. Prices are still declining; they are just not falling as fast as they are in other markets.

Boston was among the top five performers on the Case-Shiller composite index of single-family house prices in 20 cities in May. In the previous month, Boston had been number six. For May, Boston edge out Seattle out of the top five by a fraction of a percentage point.

Elsewhere on Boston.com today you should see a report by Globe reporter Kimberly Blanton that says real estate sales continued to slide in June, making the first half of this year the state’s slowest housing market in more than 15 years.

In June, single-family home sales declined about 15 percent and condo sales were down more than 20 percent, according to separate reports issued today by the Massachusetts Association of Realtors and Warren Group, which publishes Banker & Tradesman and tracks sales of all properties in the state.

However, the MAR, which reports only on sales handled within the state’s Multiple Listing Services, indicates that the inventory of residential properties available for sale was down 6.7 percent, to 50,705 listings, as of June 30. That's a somewhat encouraging sign, according to the association. At the current sales pace, this is an 8.3 months supply – the lowest supply level since June last year, according to the MAR. Just four months earlier, in February, the state had a 16.6 months supply.

But the average number of days that properties lingered on the market before being sold was up when compared with the year-ago period. Single-family homes spent an average of 129 days on market, up 2.3 percent from 126 days in June 2007. Meanwhile, condos were on the market an average of 140 days, up 12.9 percent from 124 days in June 2007.

By these numbers it looks to me like more sellers are deciding to hold off trying to sell in the current market, as opposed to more buyers jumping into the market. Is anyone out there encouraged by the supply and DOM data?

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I’ve been having some fun with the CNN Best Places to Live Poll. I hope you will, too.

CNN is saying three towns in our area are a good deal based on housing, financial and quality of life. Within housing, affordability counts. How did anything near Boston make the top 100?

Here’s my two cents on the local winners:

OK, national economy watchers, today is your day. I found a fairly concise report on real estate economics that will give you something to chew on. Feel free to read the whole thing (six pages.) Summary: Although some national economists think we are in for a long recession, some see recovery on our doorstep. Who do you believe, and why?

Money magazine's Real Estate Survival Guide, included in the June issue, has an interesting chart looking at single-family home prices in the 100 biggest US markets and forecasting what will happen to those prices by May 2009.

Anyone who is currently trying to scrape together enough cash for a decent down payment -- and worried he or she won't be able to do so before prices suddenly start shooting up -- may find some comfort in this data. Prices are expected to fall in 75 of the top 100 metropolitan areas in the next year, according to Fiserv Lending Solutions data cited by Money.

I read the local papers like they are my diary. I keep saying that real estate is a local market, I will not deny that larger economic and cultural issues will affect the way we live in the next 10-20 years. There are changes ahead in housing values.

The transportation cost increases this spring are already influencing buying and selling behavior. The past 20-30 years have been unusual in the availability of relatively cheap and safe travel options. Communication has become fast, cheap and available in many parts of the world. I know couples who set up homes in different cities and commute to see one another. Food from all over the globe finds its way to my table near Boston.

Sunday mornings, I figure out how to see the most likely property with the largest number of my clients without having an accident or otherwise wrecking havoc.

I started the in Cambridge. This was a second viewing for my buyer. The place was still filthy... There were a few buyers milling around.

Next we went to a little single family house in Arlington. It was clean and shiny, but not staged. It was swarmed with buyers. I was reminded a few times about how many people were there.

Then an overpriced single family in Arlington. The house was in nice shape, but the street and layout are atypical. Not many people there.

What I have been seeing this spring is a segmented market. Micro-markets exist in some locations and price ranges. Gus and others have wondered where these “hot spots” are. Some readers want to deny their existence.

I have reviewed the data. Nothing in it surprises me, except the number of high-end multiple offers reported. It basically confirms what I have experienced. What do you think?

A question that came up from a couple of angles in the Lowballing entry was, “How do I do a CMA in a dynamic market?’

The first principle of a good CMA is to stay current and stay local. When local isn’t possible, sometimes there are parallel neighborhoods in a town. When current doesn’t work, I must resort to time-corrective calculations (usually done by town and type of property.)

The other part of the same questions is, “If the CMA is the center of pricing and negotiation, how do markets go up and down?”

I have worked through an up market, and I have worked in a down market and I have frequently found myself in a mixed market -- like we are in right now. (There are areas where prices are going up during a national recession. It boggles the mind, but it is real.)

Most people have sold or bought a used car. Suppose a car is blue-book priced at $4000. Many sellers will ask $4500 for it, and then bargain down to $4000. If the buyer has cash, or is otherwise hassle free, the seller may go down to $3800. But would a seller go down to $3500? Not likely, unless the car is really hard to sell, he/she really needs the cash, or he/she is under-the-gun to get it sold. The buyer may pay $4200 for it, but would find another car if the seller was stuck on $4500, unless the car was very special or rare.

The same holds for real estate transactions.

More on home prices, our great preoccupation here at the real estate blog:

The Case-Shiller index, out this morning, shows the Boston market is now solidly outperforming the market in most of the nation's largest cities. Now, in these cloudy times, outperforming the average still means that prices are falling. They're just falling more slowly.

Boston prices at the end of April were down 6.4 percent compared to the same month last year, Case-Shiller reported. Only five of the 20 Case-Shiller cities posted smaller declines: Charlotte (-0.1%), Dallas (-3.4%), Denver (-4.7%), Portland (-4.7%) and Seattle (-4.9%).

Yesterday's post on the Boston market prompted some excellent discussion and questions about methodology. I wanted to make just a few points:

1. There is no question that medians are an imprecise way to capture the state of a marketplace. As several of you suggested, it is improbable that the value of homes in Winchester increased by 35 percent over the last year. It is much more likely that higher-priced homes simply comprise a larger share of sales this year.

2. That said, if you are going to use a median, you want to include as much data as possible. This increases the significance of any trend, because it limits the influence of each sale. That's why I prefer using year-to-date data instead of data for the given month. That this counts January sales over and over again is precisely the point.

3. Trends across towns still are interesting and potentially significant. Consider the map above, which shows the towns with the largest declines in median sales price so far this year. Beyond the problems in the old mill cities, it's hard to discern a pattern. To me, this reinforces why the pattern of increases in the western suburbs is so striking.

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While I am waiting to hear from y’all about your experiences with multiple offers, I want to turn my attention to the other side of this market. Today, we will discuss the tired, overpriced and/or ugly stuff that is sitting on the market begging for a buyer’s attention. Today, we discuss lowballing.

First, I would like to define my terms: Low-balling is when a buyer makes an offer well below what the property is worth. One can make an offer well below asking that is simply a low offer, but reflects knowledge of what the property is worth. It may come in lower than true value, but high enough that the seller will say “OK.” If the seller has to sell and the price is fair and reasonable (even if it is $5-10,000 below what it is worth,) you may get a "yes." That is the “sweet spot” that I look for when I am negotiating for my buyers. Sellers do not give huge discounts to strangers. If he/she is selling for $50K less than it is worth, they will not sell or sell to a relative.

This season, I made two offers which were $79,000 below asking. Neither was a lowball. I made one at $30,000 below that was a lowball. Of those, only one of the -$79,000 was accepted.

Here's the latest update of my monthly map showing towns around Boston where median single-family home prices continue to rise this year, even as prices fall sharply statewide.

The pattern remains the same: The suburban towns west and northwest of Boston, long prized for their proximity, schools and quality of life, continue to ride out the stormy market. While sales volume is down even in these towns, sales prices still are rising.

As in past months, the criterion for inclusion is an average of 10 single-family sales each month (50 sales through the end of May).

It's also worth noting that prices in a number of similar towns -- Newton, Belmont, Wakefield, Milton -- are down less than 3 percent compared to last year. The price of a single-family home in Boston also is down less than 3 percent.

Finally, there is only one town to the west of the area shown on this map where median prices are up this year: Westfield, just outside Springfield.

Here's the raw data:

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I am baffled by the segmented market we are experiencing around Boston right now. We are in a recession, yet there a many reporting that there is high demand in their segment of the market.

In an effort to get a handle on what is happening, I ask you to Click Here to take survey

Please let me know where you got into multiple offers. I will collect the data and report back on my findings next Friday.

Thank you. I hope this helps quantify what some of us are seeing out there in the so-called "buyer's market."

I am enjoying a Kick A** cupcake with a candle in it to celebrate. Tuday marks one year since I began writing here at Boston.com Real Estate Now. My first entry was posted at 4:49, June 20, 2007. It was about the importance of knowing your limits before entering a competitive offer situation, AKA, a bidding war.

Remember the client I told you about who came in second of five offers on a condo? Well, they were the bridesmaid, not the bride, again this week. They were second of three offers. The top offer had the most flexibility regarding closing time. My buyers were unwilling to allow more than two months until closing.

That brings me to today’s topic:
What is the cost and risk of delaying a closing beyond the typical 4-6 weeks between offer and closing?

A new report from the Federal Reserve Bank of Boston projects that Massachusetts foreclosures will peak no earlier than the second quarter of 2009, and perhaps not until the second quarter of 2010. The complete projections are after the jump.

The report, available here, makes the basic point that foreclosures almost always happen when a homeowner's mortgage debt exceeds the value of the home, but that only a small share of people in that situation end up in foreclosure. In other words, owing more than the value of your home is a necessary but not a sufficient condition to precipitate a foreclosure.

Most people continue to make their mortgage payments. The most obvious explanation is that they believe the value of the home will recover. The researchers also note that homeowners act as both investors and occupants. Even if a home remains a bad investment, it may be cheaper to stay and pay "rent" than to buy or rent a comparable home. In the extreme case, a person might remain in a home that has lost all of its value because their monthly mortgage payment is cheaper than any alternative.

But enough about theory. Here are the numbers.

Data for people who like data:

About 6 percent of properties for sale in Massachusetts in May were "depressed," meaning resales of foreclosures or short sales to avoid foreclosure. The market share of depressed properties has held roughly steady since February. The data comes from Movoto, a real estate search site. The term references the fact that such properties generally are sold at steep discounts.

Movoto also reports that there were 43,284 homes for sale in Massachusetts at the end of May, which is 7.4 times the number of homes sold in May according to Warren Group. This ratio is known as months of supply. I don't have complete confidence that the Movoto data and the Warren Group data are comparable, but if they are, 7.4 months of supply is frankly not that bad a number.

For the Boston area, both inventory and listing prices ticked upward in May, according to Altos Research, an analytics firm. The company says listing prices are up 2.6 percent over the last three months while inventory is up 13.4 percent. This may simply reflect the annual cycle in which inventory builds and prices rise as owners anticipate the peak of the market in the summer months.

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A beautiful new mapping tool from the Boston Fed offers a visual tour through almost two decades of Massachusetts foreclosure data. The jewel of the Web site is an interactive map that shows, like a series of time-lapse photographs, the annual pattern of foreclosures in Massachusetts since 1990.

The site also offers charts showing the history of foreclosures and housing prices in every Massachusetts city and town since 1987.

This a great resource. The data, which comes from Warren Group, is available in other places. But the Fed's interface is as good as it gets.

One thing that becomes very visible is that, consistently over the last two decades, the most vulnerable areas have been central and southeastern Massachusetts. Another striking visual is the absence of foreclosures in the early years of this century.

But perhaps it's more interesting that foreclosures remained at elevated levels all through the 1990s. Boston Fed President Eric Rosengren made this point in a speech last week: "While foreclosures peaked in 1992, they remained quite elevated through much of the decade, despite the eventual rebounding of the economy... indicating that the duration of today's situation may be longer than some are anticipating."

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The latest issue of The Economist includes a remarkable graphic charting the annual movement of home prices over the last century. The data was compiled by Robert Shiller, the Yale professor who is half the brains behind the Case-Shiller index.

The chart, at right, shows that prices could fall further in 2008 than during the worst year of the twentieth century, 1932, when prices fell 10.5 percent. Prices at the end of March this year were 14.1 percent below prices at the end of March last year.

The latest Case-Shiller data for the Boston area shows local prices are down 5.9 percent compared to last year, significantly better than the national average.

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Homes in the Boston area cost more than homes in most other places. The difference between median prices here and elsewhere is basically a "Boston Premium," an additional amount that people are willing to pay for homes near the Hub Of The Universe.

Something interesting happened to the Boston Premium during the housing boom: It got smaller. Boston housing became relatively more affordable.

The chart at right shows the ratio of the annual single-family median home prices in metropolitan Boston to median prices for the nation as a whole. In 2001, the Boston-area median home price of $331,900 was 2.12 times the national median home price of $156,600. By 2005, even as the local median peaked at $413,200, the Boston Premium had dropped to 1.89 times the national median. The data is courtesy of the National Association of Realtors.

This phenomenon highlights a great truth about the late housing boom: It disproportionately lifted the prices of the least expensive homes, because the availability of easy-money loans disproportionately increased the buying power of lower-income families.

This was true within cities: In Boston, the boom lifted Dorchester more than Back Bay. It was true within regions: In eastern Massachusetts, the boom lifted Lawrence and Brockton more than Newton and Brookline. And it was true for the nation: Prices rose most quickly in Nevada and Arizona and inland California and other historically cheap housing markets.

It is worth noting, of course, that the long-term trend remains strongly upward. Before the Massachusetts Miracle, local housing costs tracked the nation fairly closely. Now, despite a six-year decline in the Boston Premium, the local median still is almost twice as high as the national median.

But the compression still is noteworthy because it may suggest something about the future of relative home prices in a nation whose wealth and companies are increasingly distributed more evenly across the vast American landscape.

Credit: The idea of a Boston Premium is completely inspired by the "Orange Premium," brainchild of the Orange County Register's Jon Lansner.

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A 74-unit condominium building in Everett has become, with a generous dollop of state funding, a 74-unit apartment building with 47 affordable units.

The building, Parkway Heights, sits on Chelsea Street. The skyline views from the sixth floor are said to be grand. Also sweet: The developer, Winn Residential, got almost $3 million in tax credits from the state, and a $5.9 million loan from the Mass Housing Partnership, to convert the building from condos to apartments.

I'm not sure I entirely understand why it costs millions of dollars to convert condos to apartments, or luxury to affordable. Shouldn't it only cost money to convert from affordable to luxury? But maybe the building simply wasn't finished.

The initial loan was approved about a year ago. The building is now being marketed. I wandered across it while researching this morning's post and thought, what an interesting example of what can happen during a real estate downturn.

Anyone aware of other examples of condos becoming apartments?

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The decline in local home values means that many people who bought homes or refinanced mortgages in the last few years now owe more to the mortgage company than the value of their home. Such borrowers are said to be underwater, because people don't survive very long under water. For reasons discussed below, their homes are considered the most likely to be foreclosed.

The map alongside, courtesy of Zillow.com, shows the share of homeowners buying since 2005 who are now underwater by town. The data is based on Zillow's calculations of home value, which is an imperfect measure of actual value, but the overall trends still speak volumes about the areas where foreclosures likely will continue to concentrate.

The map is part of a broader report from Zillow on home values.

Borrowers who are underwater can't easily refinance or sell if they fall behind on mortgage payments. They would have to pay the difference between the sales price and debt out-of-pocket. (The alternative is a "short sale," in which the lender agrees to waive the rest of the debt.)

Underwater borrowers also tend to fall behind more easily. People will stretch to make payments, and fight to hold on, if they think their home is appreciating in value. By contrast, if they think the value is falling, the situation is more likely to seem hopeless, the loan is more likely to seem unaffordable, and the lender is more likely to end up with the keys to the home.

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Another contribution to the growing argument that our urban fringes are fraying: A study from a group called CEOs for Cities finds that low gas prices were a key precondition for the rapid rise in housing prices. Now that gas prices are rising, housing prices are falling.

The idea that price decline are hitting hardest in the exurbs -- around here, that means the I-495 corridor -- will not be new to regular readers of this blog. It seems to me that proximity to Boston is a pretty good indicator of how much value your home has lost lately.

The study, "Driven to the Brink," frames that argument about distance in terms of gas prices.

"For decades, the growth of suburban housing was predicated on cheap gas. In effect, the low price of gas made sprawl economical...

"Now that the era of cheap gas is over, demand for development on the fringe is down."

The study makes some interesting points: In 2004, adjusted for inflation, gas prices were lower than in 1990. Since then, prices have more than doubled. The study argues that has strained the budgets of home owners struggling to make mortgage payments and it has reduced the value of their homes, by making the house seem relatively more expensive to potential buyers (who will also have to pay the higher gas prices).

It also includes some pretty sophisticated mapping of price-decline patterns in cities such as Los Angeles and Tampa, showing that prices spiked particularly in the building fields of the Sun Belt, and now are declining precipitously in those same exurban areas. Some of the study's findings are based on the modeling of housing-plus-transportation affordability that I discussed in another recent post.

If you're looking for a home, have higher gas prices changed where you are looking?

Photo: Paul Sakuma/Associated Press

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Here's a bit of a conundrum for the data wonks among you: I wrote earlier this week about the Case-Shiller index, which shows that Boston-area prices declined by 4.6 percent in February. This morning I got a new report from Radar Logic, a real estate analytics firm, showing that Boston-area prices declined by 11.3 percent in February.

Boston-area homes were selling for about $200 per square foot at the end of February, according to Radar Logic. That means a 2,000-square-foot home was selling for about $400,000. Prices per square foot last reached these levels in 2003.

That's the news. Now comes something a bit technical, but hopefully worth the trip.

I'm not sure why we at the Globe focus so much on single-family homes. There were 80 percent as many condominium sales as single-family home sales in the metropolitan Boston area in the first quarter. Furthermore, I live in a condo.

And here's the good news for condo owners: So far this year, condo prices are holding up better than single-family home prices.

Statewide, Warren Group says the median price of a condo fell 3.8 percent in the first three months of the year, compared to the same period last year. My calculations from Warren Group data show similar declines for Metro Boston: 34 percent and 3.3 percent.

Here's the data for towns and neighborhoods with at least 30 sales.

Complete data on every town in the state is available here.

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Greater clarity this morning on local housing prices: The S&P/Case-Shiller Home Prices Indices reports that Boston-area prices dropped 4.6 percent in February. It is the 23rd straight month of year-over-year declines in the index, which has now dropped 12 percent from its peak in September 2005.

Case-Shiller lags the reports from Warren Group and the Massachusetts Association of Realtors, both of which released March data yesterday. But Case-Shiller is more reliable because it is based on repeat sales of the same homes, eliminating any bias caused by a change in the kinds of homes that are selling.

Warren Group reported February sales fell by 9 percent. Case-Shiller says 4.6 percent. The implication is that about half the decline reported by the Warren Group is the result of relatively more sales of lower-priced homes -- and about half is the result of a decline in the sales value of all homes.

(Warren Group yesterday reported an even larger 11 percent decline in March sales prices. It will be another month before we have the Case-Shiller data to help parse those numbers.)

This is the steepest year-over-year decline in the Boston Case-Shiller index since last March. I wrote last month that the pace of price declines had been under 4 percent for several months. The February data breaks that trend.

The relative bright note is that Boston continues to fare better than most other large metropolitan areas. Only Charlotte, Dallas, Portland and Seattle had smaller declines (or in Charlotte's case, a small increase) in sales prices.

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More on foreclosures. Some of you requested data by town. While there are endless ways to crunch the numbers, one of the most interesting to me is the foreclosure rate. I've ranked every Massachusetts city and town by the projected number of 2008 foreclosures per 1,000 residential properties. The list excludes towns with fewer than 1,000 residential properties. The data is courtesy of Warren Group.

Basically, these are the cities and towns with the highest concentrations of foreclosures.

A few notes and observations:

Almost 1,200 Massachusetts properties were seized by mortgage companies in March, an increase of more than 140 percent from the number of foreclosures in March 2007, according to new data from Warren Group.

Massachusetts foreclosures during the first three months of this year topped 2,800, also about 140 percent greater than the number of foreclosures during the first quarter of 2007.

While the profile of the foreclosure issue has diminished somewhat, the numbers underscore that the problem keeps growing. There are no signs as yet that any efforts by the mortgage industry or government officials are reducing the numbers of people losing their homes.

Warren Group reported that mortgage companies seized 1,167 Massachusetts properties in March, compared to 486 properties during the same month last year. Total foreclosures during the first three months of this year:

Month----2008----2007
January----800----350
February----860----350
March----1167----486
TOTAL----2827----1186

The number of foreclosures in March also is the highest since the early 1990s, surpassing the recent high-water mark of 1,018 last August.

An indication the worst is yet to come: The number of petitions to foreclose, an indicator of future foreclosures, climbed by 33 percent to 2,918 in March, compared with 2,189 filed in March 2007.

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A new national study by the Pew Charitable Trusts gives Massachusetts high marks for its response to the rise in foreclosures. The study, “Defaulting on the Dream,” holds up Massachusetts as a model for other states, highlighting the increased regulation of the mortgage industry and various efforts to forestall foreclosures.

This would seem to illustrate the principal that its easier to count the number of proposals announced than the number of people helped. For all the plans announced, we have yet to see evidence of a reduction in the number of foreclosures.

A prime example is the state’s commitment of $250 million to refinance troubled borrowers. The Pew report highlights the refinancing program as a best practice. The reality is that the state has managed to refinance only a small handful of borrowers.

The report also highlights the availability of counseling for people facing foreclosure. But in Massachusetts, as in other states, many borrowers have found that counseling services are unable to convince lenders to provide meaningful assistance.

Most of the success stories I hear involve the intervention of non-profits.

I would be very interested to hear from people who have successfully staved off foreclosure with help from the state or any other quarter. What worked for you?

Foreclosures nationwide more than doubled in March, according to a count by RealtyTrac. The company reported 51,393 bank reposessions last month, compared with 22,491 reposessions -- the final stage in the foreclosure process -- during the same month last year.

Of course, the number is wrong. For example, it includes zero Massachusetts foreclosures. That's right: None. Which I regret to report is not the actual number of foreclosures in Massachusetts last month.

Truth is, foreclosures are very hard to count. As the Los Angeles Times noted a few months ago, "Foreclosure is popularly understood as an event. . . Yet, foreclosure is really a process, one that can stretch over a year and vary from state to state." Furthermore, record-keeping on foreclosures in most states was historically and largely remains completely abysmal.

Assuming the state has any kind of foreclosure records, which many states do not.

"No one is measuring the truth," Mark Zandi, chief economist for Moody's Economy.com, told the Times. "This is a problem when formulating policy."

I keep tripping over reasons for cautious optimism about the health of the Boston real estate market, or at least reasons to believe that our fate is diverging from the fate of the Sun Belt, where real estate prices seem destined to fall sharply.

The latest comes from today's Wall Street Journal, which reviews recent data on the number of homes for sale in various markets. I've grabbed a screen shot of their interactive chart, comparing Boston with three other cities. Los Angeles and Miami show the line of a crash: Up, up and away as homes sit on the market waiting for buyers who are waiting for loans and they all will be waiting for a long time. The third city, Washington, offers an interesting contrast with Boston: Inventory is starting to pile up there, while our inventory levels are holding fairly steady.

Some of you will point out, correctly, that flat inventory can also reflect a market so bad that sellers aren't taking the trouble to list properties. I'm sure this is part of the explanation. Sales volumes certainly have fallen sharply. But in the truly bad markets, a growing number of people are so desperate they have to list their homes. And that much, at least, seems not to be happening around here.

Here's a striking fact from the February issue of Harper's Magazine: Because of the rapid drop in interest rates between 2000 and 2003, "The monthly cost of a mortgage on a $500,000 home fell to roughly the monthly cost of a mortgage on a $250,000 home purchased two years earlier." It was as if the nation had a credit card, and the limit had suddenly doubled.

The line comes from a history of the housing bubble by Eric Janszen, who worked as a venture capitalist during the dotcom bubble. Janszen basically argues that the housing bubble was inflated by the federal government to rescue the economy from the collapse of the dotcom bubble. His forward-looking point is a warning that the government may now try to inflate a new economic bubble. His favored suspect is the alternative-energy industry.

Far more interesting than Janszen's man-behind-the-curtain theory of economic history is his comparison of the housing bubble with the practices of the chemical industry. The housing bubble was fueled by securitization, the practice of selling mortgages as investments, which massively increased the supply of funding for new loans. Janszen argues that securitization is a new instance of the flawed theory that poison can be diluted.

Consider the chemical industry of forty years ago, back when such pollutants as PCBs were dumped into the air and water with little or no regulation. For years, the mantra of the industry was 'the solution to pollution is dilution.' Mixing toxins with vast quantities of air and water was supposed to neutralize them. Many decades later, with our plagues of hermaphrodite frogs , poisoned ground water and mysterious cancers, the mistake in that logic is plain....

Credit pollutants pose the same kind of threat to our economy as chemical toxins do to our environment. Like their chemical counterparts, they tend to concentrate on the weakest and most vulnerable parts of the financial system, and that's where the toxic effects show up first.: The supbrime mortgage market collapse is essentially the Love Canal of our ongoing risk-pollution disaster.

I don't know enough to pass judgment on this argument, but I am struck by an emerging line in many critiques of the housing bubble. The essential argument is that problems were caused by a failure to prevent the worst possible outcomes. Our offense was fine. A lot of people really did get to buy homes. But the defense -- regulation, risk controls, the word 'No' -- the defense failed utterly.

I would welcome your thoughts.

The housing bubble has found its bard. In a catchy song making the Internet rounds, a man with a twang and a guitar sings about the loss of his home. Since these are modern times, there's clever animation, too.

"I got my mortgage and I made my payments/
But my rate reset in my latest statement/
It was 1200, now it's 24/
I'm three months late, so I'm out the door..."

The LA Times tracked down the performers: The singer is a former real estate appraiser who is now working as a Web developer. The animator is a Mexican mask wrestler known to her fans as Crybaby. Neither one owns a home.

I think it's nice that catastrophes so often inspire interesting art. Otherwise it would all just be a waste.

Fascinating piece by David Leonhardt in today's New York Times, ruminating on the roots of the current crisis. What really struck me is the following paragraph:

But people - by "people," I'm referring here to Mr. Greenspan, Mr. Bernanke, the top executives of almost every Wall Street firm and a majority of American homeowners - decided that the usual rules didn't apply because home prices nationwide had never fallen before. Based on that idea, prices rose ever higher, so high, says Robert Barbera of ITG, an investment firm, that they were destined to fall. It was a self-defeating prophecy. [Boldface added for emphasis.]

Leonhardt is basically arguing that America engaged in a collective act of flawed logic. We inferred that national median housing prices would never fall, because they never had. On that foundation, we made decisions. For example, everyone paying attention trusted that mortgage securities would be safer if they included mortgages from around the country, because even if the market faltered in some regions, it would remain strong in other regions, limiting defaults.

Here's what I find fascinating: Our logic was flawed because it was self-aware.

The federal government remains reluctant to bail out borrowers, but the same reluctance doesn't seem to apply to mortgage lenders. The government spent the weekend pledging billions of dollars to stabilize the nation's investment banking system -- which provides funding to lenders and other corporations.

The impact on the economy will be direct and immediate, James Grant writes in Sunday's Washington Post. The dollar will fall in value because the government is basically promising to increase the number of dollars so it can bail out the lending industry. As a result, gas and other products are going to get more expensive.

The core of the government's plan is to help mortgage companies by agreeing to lend them money against the value of their mortgage loans. (Necessary because other possible lenders aren't so sure those loans are worth much anymore.) The largest example is the government's promise to swallow up to $30 billion in losses to help JPMorgan Chase & Co. buy Bear Stearns.

The housing market had quite a Thursday. First the good news:

Massachusetts residents can borrow significantly more money at low interest rates, to buy homes or to refinance, after the federal government broadened its loan guarantee program. The Federal Housing Administration guarantees to repay lenders if borrowers don't, allowing banks to loan money at lower interest rates. The maximum the government will guarantee increased to $523,750 in the Boston area.

One nice thing about FHA loans: You're much more protected against foreclosure. The government forces lenders to help borrowers who fall behind.

An interesting piece in the Wall Street Journal reviews the history of the FHA program, which began during the Great Depression and is now being revived. By several measures this is the worst housing slump since the Great Depression, so perhaps it's appropriate that the government is resorting to measures developed in the 1930s. It's certainly a reminder of just how grave the current situation has become.

Why do foreclosures drive down real estate prices? The largest reason is that mortgage companies tend to sell foreclosed properties at a discount. More foreclosures -- or more foreclosures in a particular neighborhood -- tend to increase discounts as companies compete for buyers.

RealtyTrac, which tracks such things, reports that last year foreclosed homes in Massachusetts resold for an average of 80 percent of market value. If a home had a market value of $100,000, on average it resold for $80,000. (How do they calculate market value? Short answer: It's an imprecise art.)

The average discount in Massachusetts was smaller than the national average in 2007, which RealtyTrac pegs at 76 percent of market value.

The relatively strong showing puts Massachusetts in the company of other states where foreclosures are mostly the result of lending and borrowing excesses rather than a symptom of sustained economic decline. Consider two states that lead the nation in foreclosure rates: In Nevada, foreclosed homes sell for 79 percent of market value; in Michigan, such homes sell for 65 percent of market value.

A reminder of the deep roots of the housing crisis: In 1994, the Clinton administration published a National Home Ownership Strategy to "achieve an all-time high level of home ownership in America within the next 6 years."

It advocated, among other measures, "...financing strategies, fueled by the creativity and resources of the private and public sectors, to help home buyers that lack cash to buy a home or income to make the payments."

This begat the Bush administration's "Ownership Society." And it worked (although being a federal project, it naturally came in a little behind schedule). The share of Americans who owned homes, stuck at 65 percent from the mid-1970s through the mid-1990s, climbed to a high point of 69 percent in 2004.

And then it didn't work. Home ownership rates fell in 2006, and again in 2007 and probably will fall again in 2008.

A provocative piece in the latest Atlantic Monthly argues that the plague of foreclosures in some suburban areas is an early sign of a broader trend toward suburban decay.

"Many low density suburbs and McMansion subdivisions, including some that are affluent today, may become what inner cities became in the 1960s and '70s," writes Christopher Leinberger. "Slums characterized by poverty, crime, and decay.

Government regulations that limit or delay development -- the so-called Zoning Tax -- accounted for 99 percent of the increase in Boston housing prices between 1989 and 2006, according to a new study by a University of Washington professor.

The basic idea is that limits on development make housing more expensive. In cities with less regulation, developers can build more housing to meet increased demand. In cities with more regulation, increased demand simply results in higher prices.

Are cities with "knowledge economies" experiencing fewer foreclosures? Ignoring most scientific rules, I compared a recent list of cities with the highest foreclosure rates to the list of cities in Richard Florida's 2002 book, The Rise of the Creative Class.

The result: Of the 25 cities with the highest concentrations of "creative class" workers, only one also ranks among the Top 25 in foreclosure rate. In other words, cities with knowledge economies -- such as Boston -- seem to be riding out this storm more easily.

We don't pay enough attention to renters. So today we're highlighting a new Web site for renters (and landlords) that deserves a little publicity. Zilpy.com, launched in late January, publishes average rents by neighborhood and unit size for the Boston area and other metros nationwide.

The site provides information in a “heat map” style similar to sites for homebuyers such as Zillow or Trulia. Unlike those sites, however, Zilpy doesn’t include listings. It’s pure context. But context is important. What renter hasn’t wondered how their monthly payment compares to the neighborhood average? What landlord hasn’t wondered whether they could make a little more each month?

It's earnings season, and here come the banks. Several of the major I-banks and a few top mortgage lenders are due to report fourth quarter earnings throughout the week, and it should be quite a spectacle.

CitiGroup, Merrill, WaMu and Wells Fargo are among the firms scheduled to report.

Being an optimistic person, I want to start a conversation about the “best” of 2007:

Falling prices have provided an opportunity for buyers with good credit who were shut out of the market. This year, I was able to work with people who were sitting on the sidelines since 2004.

The Green building training I just finished taught me some discouraging things. I learned about geothermal heating; it pays back slowly and doesn’t work well in New England’s winters. Solar power pays back well, but requires good exposure. Also better solar technologies are on the way; so waiting is not a bad idea. There are technologies out there that are painfully slow in getting to the consumers, like solar cells that look like roof shingle and solar systems that are on thin sheets. Wind power in Massachusetts? Well, I think you know.

While in Vegas getting my certificate in Green Housing, I had lunches and dinners with successful exclusive buyer agents from all over America. Here’s what they said about the second home/retirement market:

Massachusetts foreclosure deeds fell in September, and auction announcements held steady, but a rise in petitions - the first step in the foreclosure process - indicated that the state's problems with rising foreclosures are not finished.

Those of you who have followed this blog since its beginning know that my father taught me how to understand the use of numbers found in newspaper articles.

In the Sunday Boston Globe, Trey Skehan explained the use (and misuse) of averages, medians and means in discussions of income.

The pace of property auctions is picking up in the wake of last weekend's mass property auction.

Sheldon Good & Company Auctions announced it would auction off 45 luxury condominums in the Ironwood on the Green at Ferncroft project, a large condo complex in Middleton.

Some of the condos, with list prices starting at $253,000 to $442,000, will be auctioned with minimum bids as low as $125,000 to $215,000. The condos are near the Ferncroft Country Club.

The project offers the works: concierge services, high-speed Internet, a library and fitness center, and an enclosed parking space with each unit.

The auction will be Sunday, Dec. 16 at a yet-to-be-disclosed location.

"This is a terrific opportunity for buying," said Steven Good, chief executive of the auction house.

This is what members of the Massachusetts Association of Buyer’s Agents report on the Greater Boston market, October, 2007.

There are two different markets out there:

As awful as it may feel to some locals, Boston's housing market is still not doing as poorly as other major metropolitan areas around the country. The monthly S&P/Case-Shiller Home Price Index for August found that home prices in the Hub fell 0.5 percent from the previous month, compared to a 0.7 percent decline for a 20-city composite it tracks.

Q: Why are prices so high in the Boston area?

A: Because everyone wants to live in Red Sox Nation!

Q: Will this trend continue?

A: The Patriots won 52-7 yesterday...

Congratulations, New England, on being the sports region of America!

Consulting the chief economist for the Mortgage Bankers Association about the housing market is a lot like going to the Buddha for the keys to enlightenment.

The MBA's real estate buddha, Doug Duncan, has some bad news: No turnaround before the end of 2008. Duncan, in a preview yesterday for the press of his forecast released today, said he expects US investment in residential real estate to start increasing again in the third quarter of 2008.

But there may be a lag before house prices nationwide start rising. Duncan forecast prices dropping 2 percent to 4 percent annually in 2007 and again in 2008.

"Housing's drag" on the economy "will probably dissipate late in the third quarter of 2008," he said. "We have a ways to go."

Well, the cat's out of the bag about Arlington, thanks to today's story by Sacha Pfeiffer. We looked hard – and eventually bought – in Arlington for all the reasons mentioned in the story, and we're delighted with the our new house, friendly neighbors, and thriving town. But after looking at over 30 homes here during our search, it was clear to us that the fundamentals still apply, even in a "hot" market.

When I read a recent story about people paying 50% of their income on housing, I found this statement:

From 1997 to 2005, the study said, the number of low-income workers who rented their homes and spent more than half their income on housing more than doubled to 2.1 million from about 1 million. (emphasis mine.)

We have a lively conversation going about outrageous home purchase prices and the economic limbs people climb out on to buy here. Y’all need to be aware that people are going out on the same limb just to rent here. Let's talk about that.

P.S., If you followed the link above to the article in CNN Money, you’d see an ad selling adjustable rate mortgages!
Plus ça change, plus c'est la même chose. The more things change, the more they stay the same.

This month, I heard from agents north of Boston:

Essex County has experienced a marked increase in sales (August 20 to September 20), compared with the rest of the summer. However, this is not unusual, since summers are typically slower. As buyer’s agents, we need to remind our clients that some properties will sell fast, even in this somewhat slower market.
There is an increase in short sales, but my buyer-agent-eye expected more than he saw.

South Boston ranks right behind the chic Back Bay and South End neighborhoods in a new report on Boston's "hottest" real estate markets by Trulia.com, which lists properties for sale.

Trulia listed the neighborhoods most searched by visitors to its own website. It featured Boston this month, because it's back-to-school for the city's college students.

My comment: "When it is a person's time in life to buy, and they can afford to, they do."

elicited this response from my reader, Dan:

.... most people cannot afford to buy. The statistics are very clear on this matter. The median household income in Massachusetts is $52,354 (2005 statistics). According to the Massachusetts Association of Realtors, the median cost of a home in August 2007 was $357,000. That means the median home costs SEVEN times the median income.

That is not even remotely affordable. Homes are considered affordable when home prices are three times the median income. So, either incomes are going to have to rise dramatically or home prices will have to drop dramatically. The latter seems far more likely to me.

Dan is entirely right that when median housing prices passed median income level, demand should have slowed. However, three or four years ago when median price passed median affordability, demand did not decline; it increased. I have been scratching my head over the “why” of this for years now. Here are some of the reasons: people really want to live here and will do extraordinary things to make that so. Some have inheritance and gift money. Some drew money from savings or retirement. Many drew money out of the stock market just before or during the crash of the “Dot.com” market.

Maybe I need a split screen to write about the state of Massachusetts' housing market.

Foreclosures are exploding. But $1 million-plus home sales are are up smartly. The state's housing market is in decline. But downtown Boston is doing great.

Add this to the mix: The S&P/Case-Shiller Home Price Index, which true real estate junkies watch like a hawk, indicates a steady decline in prices for 20 US cities in a composite index. The 20-city index, which tracks only repeat sales, has slumped every month since January.

Miami, Tampa, Phoenix, Detroit, New York, Las Vegas -- all down, according to individual city indexes also provided by S&P this week.

Here's the surprise: Boston's prices have increased every month since February. The index hit a low of 168.04 in February but has risen every month since then, to 171.79 in July.

The Boston area index covers most of eastern Massachusetts and parts of New Hampshire.

Is a turnaround afoot?

As if we needed to be told again: Home prices, as measured by a widely followed index of continuing sales, continued their descent through July. The Standard & Poor's Case-Shiller Index of home prices in 20 metropolitan areas, including Boston, showed a nearly 4 percent drop in July 2007, from the previous July.

Prices in Boston during that same 12-month period fell 3.4 percent.

Good thing August is low season for home sales: The National Association of Realtors today reported that existing home-sales across the country just bombed in August.

Total sales fell 12.8 percent from August 2006, and 4.3 percent from July 2007; inventories of unsold homes, meanwhile jumped to a 10-month supply, well into "buyers market" territory.

The median sales price of a Massachusetts single-family home fell nearly 5 percent in August, the 16th straight month of year-to-year price declines, and the volume of sales fell 1.5 percent, according to the Warren Group.

The Warren Group, a Boston-based provider of local real estate data, said that the August median price for a single family home declined 4.9 percent to $314,000, compared with $330,000 in August 2006; August was the seventh month in 2007 in which prices fell between 4.5 and 5 percent on a year-to-year basis.

The volume of single family homes sold statewide in August was 5,528, down 1.5 percent from 5,614 in August 2006, the Warren Group said.

The Warren Group's look at the monthly housing market was one of two reports that were issued today; a separate report from the Massachusetts Association of Realtors offered a sunnier forecast.

According to the realtors' group, which uses a different methodology to capture data, the median sales price for a single-family home in Massachusetts rose 1.4 percent in August to $357,000 when compared with August 2006.

The number of single family homes sold in August rose 6.6 percent to 4,700, MAR said.

For the Warren Group, Massachusetts condo sales followed a similar pattern to what it saw for single family homes; the median August sale price for a condo dropped 1.1 percent to $273,000 from a year ago, and volume fell 2.2 percent to 3,050 units, the Warren Group said.

As for MAR, it said that August condo sales rose 3.4 percent to 2,235 units on a year-to-year basis, and that the median condo selling price rose 4.8 percent to $291,250.

Timothy Warren Jr., chief executive of the Warren Group, commented on his view of the local housing market in a statement.

"Although sales numbers have fluctuated throughout the first eight months of this year, we're seeing remarkable consistency in price changes," Timothy Warren said. "It seems the market is reaching its natural level for the time being. That trend is likely to continue during the last four months of this year."

Doug Azarian, president of the Massachusetts Association of Realtors, also issued a statement.

"It is definitely a positive sign to see two consecutive months of year-over-year sales gains to end the summer," Azarian said. "Combined with the recent interest rate drop by the Fed and continued legislative action on Capitol Hill, the potential for continued sales growth through the fall is good."

Home buying tends to be seasonal in Massachusetts, with big bursts of activity generally coming in the spring and the fall. Typically, August is not a big month for sales in the Bay State.
(By Chris Reidy, Globe staff)

I’m Jewish. I can say: “If you have two Jews, you have three opinions!” I am not an economist, but I will say: “If you have a room full of economists, you have a room full of opinions.”

Robert Shiller is one of the smartest men out there talking about real estate; it’s his life’s work. His report to Congress is carefully crafted, as is all his work. However, the National Association of Business Economics surveyed their membership to find that only 29% of them think there is a “serious national bubble” in U.S. real estate.

Yale University economics professor Robert Shiller, who book on the stock market bubble is titled Irrational Exuberance uttered the "D" when discussing the future of the housing market.

"I am worried that the collapse of home prices might turn out to be the most severe since the Great Depression," Shiller, a longtime analyst of real estate, said today in testimony before a Congressional committee.

In June and July of this year, three condos in a triple-decker sold for $295,000 each. They are about 600 square feet each, with 4 rooms and 1 bedroom. For a buyer with 10% down plus closing costs (about $35,000), that obligates them to a monthly mortgage payment (with tax and insurance) of about $1885.

National foreclosure filings in August were up 36 percent from July and 115 percent from August 2006, according to a market forecast out today.

The forecast was prepared by RealtyTrac, a California-based online marketplace for foreclosure properties.

Nevada, California, and Florida posted the top state foreclosure rates in August, and Massachusetts was ranked 12th, said RealtyTrac, which defines foreclosure filings as default notices, auction sale notices, and bank repossessions.

"The jump in foreclosure filings this month might be the beginning of the next wave of increased foreclosure activity as a large number of subprime adjustable rate mortgages are beginning to reset now," RealtyTrac chief executive James J. Saccacio said in a statement.

The number of bank repossessions, he added, is "increasing dramatically, which means that a greater percentage of homes entering foreclosure are going back to the banks."
(By Chris Reidy, Globe staff)

MLS Property Information Network is the company that runs my multiple listing service. There is an ever-changing set of rules for using this database, which reflect changes in the marketplace.

The Network wrote to its agent-members:

SHORT SALES: While there is no prohibition from entering "short sales" into MLS Property Information Network, I must caution you that doing so without the list price being approved by the lending institution may leave you open to charges of misrepresentation by prospective buyers who feel they've been mislead. Understand, as well, as with any listing in the MLS, you are making an offer of compensation and may also be held to honoring that offer of compensation. In addition, if the lending institution requires pre-approval of the buyer before accepting offers, that needs to be disclosed as well. Cooperating agents need to know the requirements of the lending institution before working to produce the buyer!

Allow me to translate into English from broker-speak: Brokers may list foreclosing properties in the MLS. However, if the lender/seller rejects a full priced offer and asks for more, the buyer could sue you. If you offer a commission to a co-broker, then the lender/seller won't pay it, you may have to. If there are special rules regarding paperwork, you need to disclose them.

I've been seeing short sales since early this spring (this time, I saw many in the early 90s). They are tricky and often aggravating. My buyers have had their price raised after their offer was accepted (they could reject the counter-offer, but didn't), I have been asked to cut my commission (I didn't), I have not yet seen (this time) lenders who required that my buyers borrow from them, but that was common in the 90s.

Bravo, MLS-PIN, for policing your database so that it accurately reflects what is for sale, how much it will cost, and what the rules are for buying it.

Late summer is a jumpy time for Americans. Many are still on vacation, some have returned, some never went, some spent their summer vacation driving their children to colleges. Workplaces run with smaller staff, substitute staff, or just do less work. Children's camp is over; now, children remember their summer reading assignments. And... all the therapists are on the Cape and Islands!

In the financial world, the credit markets have tightened. Interest rates are up, especially on larger loan amounts -- or are they about to go down again? The stock market...let's not try to make sense of the stock market this August!

MassBuyerAgents.com has a chat group for members. Here's the August field report: Business increased or no change. No one reported an unusual slump. Several reported an increase in "short sales" and bank-owned (foreclosed) properties up for sale, but the prices were not low enough to entice a smart buyer.

My last two clients made offers in competition, according to the listing agents. I have a normal level of inquiry, not reduced by economic instability or the season.

Home prices are down a little and the interest rates are up a little. Times are confusing but, there is no need to panic. My colleagues and I are enjoying a steady business because informed buyers want to work with agents whose focus is helping buyers, not sellers. We are popular in insecure times.

Alas, I'd rather be on the Cape with the therapists. However, duty calls.

Single-family house prices in the Boston metropolitan area have dropped 3.7 percent over the past year, according to the S&P/ Case-Shiller home price index, released earlier this week, which measures price changes in 20 large metropolitan areas.

Boston falls somewhere in the middle. Detroit's prices have plunged 11 percent and Tampa's nearly 8 percent. Countering the general trend, Atlanta house prices are up 1.6 percent and Seattle's up almost 8 percent.

Most interesting is that Boston's index indicates an improvement. That isn't surprising given that the metropolitan area housing market went into the downturn in April 2006, earlier than other cities.

"Boston has shown improvement since the beginning of the year, where its annual growth rate measured minus 5.5 percent," Standard & Poor's said in its press release. Translation: the local market is still in decline but the size of that decline has tapered off.

More data will be required before declaring that an upturn is under way. And the mortgage crisis is a wild card.

Readers frequently complain about the bad-news stories that I've written over the past year about the Massachusetts' housing market as it has fallen from its all-time highs.

They're right to some extent. The market is down, but the reality is more complex than a single sales or price figure.

For one thing, the monthly reports from The Warren Group and the Massachusetts Association of Realtors for the entire state obscure variations among various counties and in the Boston metropolitan area. For example, the median price in Middlesex County dropped just 1.5 percent in July, while Worcester County's price was off 7.4 percent.

And condominiums saw price gains in downtown Boston during the second quarter, according to Listing Information Network, which tracks only the core downtown neighborhoods in a separate report.

The downtown rebound amid a national downturn is something of a mystery but certainly can be partly explained by the growing popularity of downtown living among the well-to-do. Developers have rushed in to fill that need with luxury condos.

Also, as I've noted in several articles, Massachusetts' housing decline started earlier, and some of the dire reports on the US housing market may not apply. If you're a Massachusetts homeowner or trying to sell, a 4.6 percent price drop is hardly good news. But it's a lot worse in other housing markets. The limited supply of housing in the Boston area tends to put a floor on prices, analysts say.

Finally, readers and agents complain that critical coverage causes the market's decline. While journalists report what has already happened -- July sales aren't written about until August -- we no doubt have some impact.

Economists would respond that information is the grease that keeps the markets humming efficiently.

Sam Garcia, the publisher of MortgageDaily.com, a mortgage industry newsletter for subscribers, today declared this "one of the worst weeks" in the industry.

He makes a good case.

Nothing this week topped continuing revelations that Countrywide Financial Corp., the nation's biggest home lender, is struggling. Bank of America Corp., the nation's biggest commercial banking company, injected $2 billion into Countrywide, a move analysts said would buy Countrywide time.

But there was other news, not as high profile, as Garcia noted in his group email today. Capital One Financial Corp. closed its mortgage subsidiary, GreenPoint Mortgage. Lehman Brothers closed BNC Mortgage LLC. Accredited Home Lenders Holding Co. closed its retail loan operation, and HSBC Mortgage Corp. plans to close an Indiana mortgage operation next year.

In every case, Garcia noted, hundreds of mortgage-industry professionals are losing their jobs.
So much for the summer doldrums.

There may be some help for laid-off mortgage professionals on Sept. 9 at the New England Mortgage Bankers Conference in Providence, R.I. The conference is hosting a job fair.

This summer, the second most-popular spectator sport in Somerville is MBTA-Watching. Somervillians have heard promises of a Green Line stop (or two) and an Orange Line stop, on-and-off for years and years and years.

August was a bad month for MBTA-Watchers: they suffered more delays in the Green line and in the Orange line projects.

Somerville needs mass transit! It is a dense city, just 2.5 miles from Boston, yet it takes about a half hour to get from Union Square to Boston by bus and train. A quarter of its households do not have a car. Eight train lines pass through Somerville, yet it has only one T stop. Somerville took on tons of air pollution and hours of traffic delays while the Big Dig was dug. Yet Somerville waits for promises made to be fulfilled.

Some MBTA-Watchers grin and bear it and say "wait until next year!" They have been tireless fighting for their MBTA stops. They come to all the hearings, even the one called during the playoff again against "them" in 2004.

At least the other spectator sport is bringing Somervillians some pleasure. The Sox are doing great as we round the end of August. Go Sox!

Oh, Kim! You say it is tough times for real estate agents? I am not crying for the people who walked into my business thinking it is an easy buck, and are now crying that they had to work too hard for their pay. Let them quit in droves.

It is tough times for lots of people in real estate: It is a hard time to buy if you have trouble borrowing; it is a hard time to sell if you need to get an especially high price to cover your debts; it is a hard time to sell newly developed condos; it is an awful time if you work for a lender.

The newspapers and blogs are full of confusing and sometimes contradictory information about what is going on in the economy of real estate. Prediction is futile, unless you want to be wrong. The only breath of fresh air in all this is that the agents who don't know how to make a living are leaving the business, the people who were over-borrowing have been shut out, and the speculators are thinking twice. I see all these as good things. Bring it on!

Whenever a house sells in my neighborhood, my neighbors ask me, "how much?" Then one will say something like this: "If he got $325,000 then my house is worth $390,000..."Invariably, my neighbor has inflated his home's value by $20-30,000.

Why is this? According to Daniel Gilbert in Stumbling on Happiness we agree with information that reinforces what we already believe. Therefore, the single fact of one house sale allows my neighbor to feel confident about his (wrong) price.

So when the Massachusetts Association of Realtors and the Warren Group do their monthly review of the real estate market, I take it with a grain of salt. They are going to see what they expect to see in this tiny snapshot of market data. I believe that we cannot see the forest for the trees when we look at such a large sample of housing (all of Massachusetts) over such a small time frame (one month.)

If you are a buyer and you can't predict the market, what should you do? Buy when your need to buy is real. Buy what you can afford, not more. Buy for the long term; this is a bad time for short-term "starter houses."

Buyers and sellers, I can predict this: The fall market will be interesting!

The different July home sales tallies reported today -- and every month -- by the Massachusetts Association of Realtors and The Warren Group reveal a vexing issue.

But it's all in the data.

As I often explain in articles, their databases are different, which accounts for different results. The realtor group relies on the number of closings reported only by agents who are members of three multiple listing services in Massachusetts, for Cape Cod, the Berkshires and the largest one, MLS Property Information Network. The Massachusetts Association said that's roughly 80 percent of all agents in the state.

Warren Group goes to the courts and looks up closing documents statewide, totals them up, and reports those.

Warren Group's data base is much bigger, as can be seen in its tally of July's single-family sales in Massachusetts: 5,229 single-family sales in July, compared with MAR's report of 4,363 sales.

No database is perfect. Warren includes sales by owners, which could be as much as 10 percent of the market -- the real estate agents, for obvious reasons, do not.

Also, Warren's data in recent months has been more bearish than MAR's.

One reason may be because Warren includes what are known as " non-arms length" sales. In English, that means dad sells his daughter his condominium, valued at $500,000, for just $200,000. That may tend to pull down the prices.

Massachusetts housing sales rose in July after four straight months of declines, and the median selling price of a single-family home increased 1.3 percent in July to $365,775, according to a new report.

Today's report is from the Massachusetts Association of Realtors, which said the July sales volume of single-family sold in the Bay State was 4,363, up 6 percent from July 2006.

"It is encouraging to see sales go up in July after four straight months of year-over-year declines," Doug Azarian, the association's president, said in a statement.

Massachusetts condominium sales fell 0.1 percent to 1,933 units as the median selling price rose 6.3 percent from a year ago to $293,500, the association said.

July is hardly the busiest month for the housing market in Massachusetts, where activity often peaks in the spring.

A Globe story last month characterized the spring real estate market in Massachusetts as a "washout."

Meanwhile, the housing market has Wall Street fretting about problems in the subprime mortgage market triggering a domino effect for the larger economy.

Those subprime problems have some mortgage lenders tightening credit standards, and there are concerns that such moves could be a drag on the housing market in the coming months by thinning out the number of potential buyers.

Azarian addressed some of those concerns in his statement.

"While the tighter lending standards may have taken some buyers out of the market, it appears that those who have good credit and some equity are getting the financing they need and are buying again," he said.

Another potential bright spot for sellers: The statewide inventory of single-family homes and condos on the market as of July 31 was 53,966, down 17 percent from the same day in 2006, the association said.
(By Chris Reidy, Globe staff)

From where I sit, as a buyer’s broker, the recent credit crunch may be good news. Please don’t think me simple-minded because I am not reacting to it with trepidation. I know all about the collapse of the sub-prime mortgage market and last week's stock market gyrations. Those things just don't upset my day-to-day business.

Real estate is the ultimate long-term investment. If you invest in it with that attitude, you win! Your stocks have no use except to grow your money. Homes have the added bonus of being useful while they appreciate (and depreciate). You live in them; if you don’t want to live in them, you can rent them. Can’t rent your stock, not even on Craigslist!

I work in all market conditions like I work in all weather. Current conditions are bad for speculators and people who have been over-borrowing. But they are good for my clientele; I work with well-informed, qualified buyers. The weather is pretty fine for buyers with good credit, steady jobs, and down payment. It may even be getting better.

My lender friends are going nuts with all the changes in investor’s rules. The rules are changing daily, sometimes more than once daily. Some good -- but not great -- borrowers are getting caught in this investor reaction to the credit crisis. But it is still sunny times ahead for buyers who are solidly qualified to borrow.

I have been hoping for, but not quite seeing a true “buyer’s market.” Dropping prices and higher inventory are sunshine to my day. I remain hopeful, but still bring my metaphorical umbrella to work everyday.

Let's see, if I moved next to Mayor Menino, I would ...

Today's Globe story about the Hyde Park house next door to Hizzoner coming up for sale drew a few truly comic responses from readers on the boston.com message boards.

Does the overall market downturn represent a buyer’s market, as I recently suggested? Not to one reader. "Pardon me while I scoff in your general direction," wrote in political blogger Greg Decker.

Rates are going up in the Boston area, making it even tougher to find exactly what you want.

But renters have their priorities -- 81 percent said parking and air conditioning were the most important amenities in an apartment -- according to a new survey by Apartments.com.

Boston's housing recession is worse than many of the nation's other top metropolitan areas--so far.

Standard & Poor's released its monthly index for May that tracks of homes prices in 20 major metro areas around the country. As you can probably surmise, the bottom to falling home prices is no where in sight.

Just last week, I caught up with the best rental agent in the area. I was begging a favor. She was glad that I called in late July, because she was too busy through June and July to even consider taking time for my favor. Now, she says, is her slow time. Slow time?

Every year, The Boston Globe publishes a Sunday article on the sudden, increased demand on rental housing that occurs every year in late July and August in the Boston area. Well, here it is!

Recent reports make it clear that the housing market slump will not end soon. Anyone facing foreclosure or trying to sell a home has felt the effects of this downturn, but what about the rest of us? I suspect that sectors of the economy unrelated to housing will soon be dragged down as well. Beginning in 2003, hordes of existing homeowners took advantage of skyrocketing values and plunging interest rates to transform their homes into virtual ATM machines, using the new cash to buy cars, vacations, anything. Rising interest rates and declining home values have almost eliminated this practice, stopping the flow of liquefied home equity into the economy. Like an engine starved for fuel, will the broader economy now begin to sputter?

I just finished Harry Potter and the Deathly Hallows. Don’t worry; I won’t tell what happens to He-Who-Must-Not-Be-Named to Those-Who-Have-Not-Yet-Read.

The real estate topic that I can draw from these books is the ever-magical issue of “what is it about style that makes a house fly off the market, or not?”

The Dursley’s house (Harry Potter's much-hated uncle and aunt)is a nice, neat suburban home, much like its neighboring homes. It’s in a little town outside London -- sort of Britain’s answer to Long Island. Were it in America, it might be a ranch or a Cape Cod or a split-entry built in the 50s,60s or 70s.

Buried in an otherwise unexceptional report on mortgages is this choice morsel from the Federal Housing Finance Board on the state of the nation's real estate market in June: "The average house purchase price increased $12,700 to $309,700."

Huh? The entire real estate market except for maybe swank condos in downtown Boston is in a funk and people are paying more for houses? The National Association of Realtors reported a similar upward trend in prices for June today, though at a substantially smaller gain than the 4 percent the federal agency saw. The Realtors group is comparing June 2007, to June, 2006, while the federal finance board is using May 2007 for its comparison.

The National Association of Realtors reported today that June home sales fell nearly 4 percent from May and are down more than 11 percent from a year ago. It's the lowest sales level since late 2002. But the news received a glass-half-full analysis from the Realtors group, which highlighted a 0.3 percent increase in the national median home price to $230,100 from $229,300 in June 2006.

Well, one part of the Massachusetts real estate market is doing well: downtown Boston.

Both the number of sales and home prices in the city are heading up, unlike the rest of Massachusetts. Listing Information Network, which tracks the 12 core downtown neighborhoods from Beacon Hill, the waterfront to the South End, said there were 7.5 percent more sales of condos during the second quarter of this year compared to 2006.

So, what's selling? High-end units with two, three or more bedrooms.
Prices are up, too: The median price, $472,750, is 4 percent higher than last year.

The Patrick administration is considering a plan that would make mortgage lenders pay moving expenses as well as the first and last months' rent of homeowners who lose their homes to foreclosure.

The proposal is part of foreclosure prevention initiative administration officials will present today at a meeting with some of the state's biggest mortgage lenders. The plan would make lenders that foreclose on homeowners pay $5,000 for the relocation and administrative costs that nonprofit agencies would incur in finding them a new home, according to a draft obtained by the Globe.

It's unclear exactly how this would work; the draft plan contains few details. Kofi Jones, spokeswoman for the Executive Office of Housing and Economic Development, declined to comment on the specifics of the proposal but did confirm today's meeting.

"The Patrick administration is in the process of trying to put together a comprehensive plan to try and solve this foreclosure crisis," Jones said. "We are committed to protecting homeowners and communities throughout the Commonwealth." (For more information read today's story in the Globe)

(By Robert Gavin, Globe staff)

That uptick in January housing sales is a distant memory.

I reported back then that housing sales were up and the market "may be recovering from its worst slump in more than a decade."

June's sales reports, released by the Massachusetts Association of Realtors and The Warren Group, should pretty much squash any lingering optimism about a 2007 recovery.

Massachusetts single-family homes and condominium sales continued to fall in June, a month that is typically one of the busiest of the year for closing real estate transactions, according to industry reports out today.

"June was a tough month for housing sales - one of the toughest this year," said Timothy Warren Jr., chief executive of the Warren Group, a Boston-based provider of real estate data, in a statement.

The Warren Group issued a report on monthly housing data, and so too did the Massachusetts Association of Realtors; because they use different methods to gather data, their results can differ.

According to the Massachusetts Association of Realtors, the number of Bay State single-family homes that sold in June dropped 6 percent to 4,959 when compared with June 2006, and on year-to-year basis, the median price for a single-family home in Massachusetts fell 1.6 percent, from $370,000 in June 2006 to $364,000 in June 2007.

"The month of June is following the trend of the past several months in that sales volume is down, but median prices are stable compared to the year before," Doug Azarian, the association's president, said in a statement.

In its separate report, the Warren Group said that Massachusetts single-family home sales fell 8.3 percent in June, the second biggest drop this year; the median price for a single-family was $334,000, down 4.6 percent from $350,000 in June 2006.

The Massachusetts Association of Realtors reported that condominium market also saw a decline in sales compared to June of last year with a 3.6 percent to 2,352 units sold, but the median selling price for a condo was up 4.4 percent over June of last year, from $283,500 in June 2006 to $296,000 in June 2007.

According to the Warren Group, condominium sales experienced the worst drop in sales all year in June, with sales falling 12.3 percent from June 2006; the median sale price in June fell 4.1 percent to $280,000.

According to the Massachusetts Association of Realtors, the inventory of residential listings that was on the market as of June 30 - the inventory includes both single-family home and condo listings - decreased 16.6 percent compared to the same time last year, from 65,325 listings in 2006 to 54,497 listings in 2007.

As if we don't already know how glum the housing market looks, mortgage giant Fannie Mae releases a monthly outlook that now forecast home sales nationally in 2007 to drop by more than 10 percent. The company says that in addition to less-than-robust economic growth and still-high housing costs, the crisis in subprime mortgages, which has led to somewhat higher rates and tighter lending standards, is also limiting demand.

Right under our noses the whole time, sleepy little Milton, Mass. is named one of the best places to live in the entire US of A by Money magazine. See for yourself.

Not surprisingly, the folks who build new homes for a living are kinda glum these days about the real estate market. The National Association of Home Builders said it's most recent monthly survey showed a decline in members' confidence. Among four regions of the country surveyed, the Northeast joined with the South in having the largest measured decline of builders' confidence.

Interesting discussion underway in southern California, where the local MLS service has removed days-on-market data from its property listings. In down times, such as now, a big days-on-market number can give a house the odor of a loser. The flip side are suspiciously short days-on-market data--are brokers pulling stale homes off the listings, and then relisting to make it appear a new offering? The Orange County Register has coverage of the matter here. Kudos to the bloggers at Inman News for watching.

Twenty-five years after my tour of duty along the Iron Curtain, I returned to Germany for a just-completed family vacation. While I didn’t go house hunting, all signs pointed towards a booming economy. Roaming around Munich and Nuremberg and driving through the Bavarian countryside, I didn’t see a single empty storefront and only a smattering of “for rent” signs.

Economists forecasting a rebound in the housing market are beginning to sound like Red Sox fans...maybe next year. The National Association of Realtors is now predicting that home prices nationwide won't begin to rise again until early next year, with a 1.4 percent decline in median prices this year.

My last post The Wisdom of My Father inspired this from a reader:

“Rona...
Not sure your point with this blog entry.. are you saying that the Northeast is OK compared to the rest of the country? That the Northeast has turned the corner?”

I would like to answer him and anyone else who is looking to me to be part economist/part psychic:

I would rather poke my eyes out with a rusty paper clip than get into the prediction game. I am not an economist and I am not interested in wrestling statistics to death. My last post was about how the economic "news" is poorly written for those who do not read the whole article. The headline says DOWN, the news is UP.

My reader continues: “I agree the May Northeast number is up 3.8% from last month, but it is still down 9.9% from May of 2006, down 7.3% from January of 2007 and down 15% from the 2005 year number...”

The stats behind the AP article are about sales volume (number of pending sales) not price. When sales volume goes up or down, it indicates a problem with either the amount of supply or demand. Whether volume goes up or down is not a predictor of price unless you understand why it is changing.

Those who love numbers, have fun. However, knowing the change in sales volume without knowing the on-the-ground market conditions is predictive of nothing. I will continue to report on what I see and y’all can make your own predictions.

Kris Frieswick’s father was a repo man. Mine worked for the New York Post in distribution (Did you ever wonder how newspapers got to those little kiosks in New York City? That was my Dad!) He’d read all the daily papers and compare the stories on the train coming home. We’d discuss them over dinner.

When I read the most recent AP article on housing, Pending home sales index falls 3.5%, I feel grateful for being taught how to read a newspaper. My father taught me:

When faced with statistics, read the entire article before looking at the numbers. Figure out what is relevant to you. Then, look at the figures and try to understand their logic. In this article, I do not even need to understand the economic information because I can read what is relevant to me, -- and to you, the buying public – a little more than halfway down the page:

“Pending home sales rose in the West and Northeast, the association said, but fell in the South and Midwest."

Anyone who read just the headline or the first half of the article got the entirely wrong idea of what is happening in the Northeast.

Happy Independence Day. I hope my Dad and I help you become independent readers!

The Warren Group and MLS collect great data, for which I am grateful; however, the data they publish does not much help me and my buyers.

First and foremost, to fully understand what is going on with prices, one needs to look locally. State-wide and regional figures do not help a buyer figure out what to do. Second, markets are patterns. You cannot see what is happening by looking at a few months at a time.

Here’s what I do. I look at a smaller area for a longer time. Here are towns within I-95* (data collected from MLS). Starting at 2004, I see a big decline in the number of sales by 2005, and prices slipping down in 2006. That’s when all the “real estate bubble” talk made sense. Now, prices are about even to what they were last year – not as far down as Warren Group sees and not going up as the Realtors say. We had a buyer’s market going last year, with nearly seven months of inventory sitting around to pick from. This year, we have only four month’s supply. That is not indicative of severe price dropping.

Remember, I am a buyer’s agent. I think lower prices are good and I would love to see more of them. However, I do not see a bubble burst around the corner, no matter how much I hope for one.

*towns used: Brookline, Newton, Belmont, Lexington, Arlington, Winchester

Not everyone is finding the bargains I wrote about in today's story on Cape Cod summer rentals. I received a note this morning from a reader in North Carolina who scoffed about the "deals" purportedly available. "You guys on the Cape are crazy!!" he wrote.

The May housing numbers for Massachusetts that came out Tuesday show a continued weak selling market, and reinforced predictions that prices will continue to fall into 2008. So what, another 5 percent? That's not out of the question given what we've seen over the past year.

Both the Warren Group and the Massachusetts Association of Realtors just reported that the number of single family homes sold in Massachusetts in May 2007 was less than the number sold in the same month a year ago. Comparing prices for the same two months, the Realtors say the median price rose 0.7%, while the Warren Group says it declined 4.5%. Obviously they’re interpreting the data differently and I have no way of knowing who is correct. I do know that fewer and fewer homes are selling these days and that can only continue to drive prices down.

Can you imagine preparing for a Sunday open house at the four-bedroom colonial you’ve had on the market for months and then picking up Saturday’s Globe and seeing on the front page that your town, Stoneham, has just cut all public school athletic programs?

An optimistic survey finding came over my email transom today, saying 55 percent of Americans believe their home would sell for more today than it would have last year.

My first reaction to this: denial.

The chatter at the recording counter at the Lowell Registry has turned pessimistic. May’s assertions that June would be “a good month” and that “things are starting to pick up” have given way to the reality that the market remains flat. Historically, June is one of the busiest months for the recording of deeds here at Middlesex North, but you have to go back to 1997 to find fewer deeds recorded during the first half of June. The slowdown in mortgage recordings is almost as bad. The 659 mortgages recorded during the past two weeks were the fewest for the first half of June since 2000. To put it in perspective, at the height of the refinancing boom in 2003, we recorded 1828 mortgage during the same two weeks. Of course, many of those mortgages are now in foreclosure, but that’s another story.